Nippon Oil in deal with PetroChina

Nippon Oil Corp, Japan's largest refiner, will gear up output to produce 40% more crude oil for a unit of PetroChina<601857><857>, sources reported.

The Tokyo-based refiner is in talks with China National United Oil Corp (Chinaoil), with the signing of an agreement expected this month, said people close to the situation. Under the agreement, Nippon Oil will boost daily processing to 70,000 barrels from 50,000 barrels.

Nippon Oil wants to expand its 2004 deal with PetroChina, China's largest oil producer, which expires at the end of this month, to help the Beijing-based oil giant cope with increasing demand for automotive fuels.