Wednesday, March 26, 2008

CNOOC, Shandong to boost downstream ties -newspaper

CNOOC and Shandong province want to push forward their cooperation in the downstream sector following a framework deal agreed to in early January, a local newspaper reported on Wednesday.

"Both sides should quickly start integrating local refiners, building ports and oil storage tanks," the Dazhong Daily quoted Wang Renyuan, deputy governor of Shandong, as saying during a bilateral meeting.

"Favorable conditions should also be facilitated for a liquefied natural gas project and be implemented as soon as possible, while projects for a chemical park, natural gas pipelines, gas supply to cities and sales networks for oil products should also be considered," Wang said.

The newspaper report did not provide further details, including investment levels or the timeframe of the planned cooperation in these fields.

"There have been some results after the initial deal, and CNOOC will further its efforts in cooperating with Shandong," CNOOC's Deputy General Manager, Wu Zhenfang, said.

The offshore oil specialist, which is eager to become an integrated oil firm, sells its crude oil to either domestic or overseas refiners, but will begin feeding its first oil refinery in October in southern Guangdong.

It does not yet have any refining business in northern China.

Shandong boasts around a quarter of China's independent refining capacity, but most of the refiners are small and have little access to crude oil that is either produced or imported by state-owned firms.

CNOOC, the parent of listed CNOOC Ltd <>, had expressed an interest in taking over small independent refiners in Shandong and consolidate and expand them into big ones.

In October, it bought a small private fuel and petrochemical producer in Hebei, a coastal province neighbouring Shandong, and intended to expand it into a 200,000-barrel-per-day refinery.

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