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Petrochemical sector to get major lift under revival plan

CHINA plans to increase annual oil refining volume by 18 percent in three years, boost state fuel reserves and exploration as demand rises in the long term.

It aims to process 405 million tons of crude oil in 2011, up from 342 million tons last year, the State Council, or China's Cabinet, said yesterday as it outlined the rejuvenation plan for the petrochemical industry.

The industry is facing structural problems including a low concentration rate, heavy reliance on imports for high-end technology and equipment, lack of products with high added value as well as pollution. It has been hard hit by the global financial crisis since the second half of 2008 with slumping output and prices.

"So far, our petrochemical demand is still rising," the Cabinet said. "The demand for fuels, fertilizers and pesticides will exist in the long term, and the market potential for high-end products is huge. We must take advantage of the current market situation to expedite industry adjustment and revitalization."

China also aims to raise production for refined oil products by 20 percent to 247.5 million tons and that for ethylene, a key petrochemical building block, by 51 percent to 15.5 million tons during the same period.

In the near term, the government will select two to three large refineries for expansion, the Cabinet said, without giving details. It will also study building refining projects in the southwest of the country to process crude from Myanmar via proposed pipelines.

The government wants bigger refineries and is phasing out small, inefficient plants to boost efficiency and reduce pollution. It is also tightening control on new projects to prevent overcapacity.

China plans to have 20 refining bases, each with a capacity of at least 10 million tons a year by 2011, from 14 now. Three or four refining bases will have an annual capacity of 20 million tons, the Cabinet said.

Refineries with annual capacity of less than 1 million tons will be closed, and those with 1 million to 2 million tons will be asked to shut, or be merged.

China will boost domestic oil search and build up fuel stockpiles.


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