Sinopec Aims to Double Luoyang Refinery before 2020

The plant in central Henan province has nameplate refining capacity of 200,000-barrel-per-day (bpd), but actual production capability is lower due to factors including crude transportation bottlenecks.

"Henan's fuel consumption topped 10 million tonnes a year, and we could churn out only half of that," Wei Wenbo, head of the plant told reporters on the sidelines of China's annual parliament meeting, where he was a delegate.

Luoyang is the largest fuel supplier in Henan, China's most populous province and the largest wheat planting region. Other suppliers includes PetroChina, China's second largest refiner.

"Our crude processing capacity will increase to 360,000 - 400,000 bpd before 2020 and a delicate crude pipeline linking with a port in a coastal city will be built," Wei said.

About half of the crude Luoyang processed each year was imported via a small pipeline as well as by railway, with the rest coming from domestic oil fields, mostly in train tanks.

The crude transportation cost for Luoyang was about 200 yuan per tonne higher than Sinopec's average, according to Wei.

"China has set a target to develop its central regions, it means a large fuel demand growth potential."

Luoyang lost 2.9 billion yuan ($459.83 million)on crude refining in 2011, far outweighing a profit of 300 million yuan earned by its chemical unit, according to Wei.

"Sinopec's refining loss has hindered new equipment investment. Still, the company has planned a lot to meet future fuel demand."

Luoyang planned to process 160,000 bpd of crude oil this year, up from the 133,000 bpd in 2011. The plant was closed for a 45-day maintenance in September and October last year.

(Reuters.com, Edited by Topco)