Rosneft to Get Feasibility Study on Oil Refinery in China Before Summer’s End

MADRID. July 1 (Interfax) – Russian oil company Rosneft (RTS: ROSN) expects to receive a feasibility study on the construction of an oil refinery in China before the end of the summer, Rosneft President Sergei Bogdanchikov told journalists in Madrid on Tuesday.

Shell Global Solution is to present the feasibility study in the next two months, he said. Rosneft is planning to build the refinery jointly with China National Petroleum Corporation (CNPC).

“We are studying the possibility of refining oil in China. All the majors are already represented there, therefore we’re also interested. But we believe that an agreement has to be reached on having profit margins of 20% there,” he said.

Bogdanchikov also noted that a feasibility study on an oil refinery to be built at the end of the East Siberia-Pacific Ocean (ESPO) oil pipeline is in its final stages. Rosneft will receive the feasibility study in the near future, after which it will make the necessary adjustments and send a draft version on to government agencies for endorsement, he said.

In late October 2007, PetroChina (51%) and Rosneft (49%) set up a joint venture called Russian-Chinese Eastern Petrochemical Company. Apart from the refinery, the joint venture is expected to own around 300 gas stations in China. The oil refinery will be built in the Lingang industrial zone in the northern part of the centrally administered town of Tianjin, which the government has called the national base for developing China’s oil industry. The oil refinery could be commissioned in 2011.

The oil refinery will manufacture high-quality fuels compliant with international standards, such as gasoline and diesel under Euro- 4 Standard, to satisfy the fuel needs for the northern Chinese provinces, which are expected to experience a substantial deficit in fuel. According to forecasts, this region will have a petroleum product deficit of 20.76 million tonnes.

Investment in the refinery, which will have capacity to refine 10 million tonnes of oil per year, is estimated at $3 billion-$ billion.

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