China’s $3 Bln Refinery Expansion May Cut Costs, Boost Profits

China, the world’s second-biggest oil consumer, plans to spend $3 billion on refinery units able to process cheaper, lower-quality Middle East crude oil to cut the nation’s annual import bill by as much as 20 percent.

The investments over the next two years will boost the profit on each barrel processed by China Petroleum & Chemical Corp., Asia’s biggest refiner, and PetroChina Co. The expansion may help ease a global shortage of capacity to handle oil from Saudi Arabia, the world’s No. 1 exporter, and other producers of so-called heavy, sour oil that’s high in sulfur.

China’s oil import costs rose 86 percent to $4.66 billion in May because of higher prices and increased purchases to meet soaring fuel demand. Saudi Oil Minister Ali al-Naimi last week said prices may stay high until consuming countries build more refineries to absorb the kingdom’s surplus oil.
Bloomberg