Sinopec to spend big on refining and chemicals at Beijing’s behest

China Petroleum & Chemical (Sinopec), the world’s second largest oil refiner and a major producer, has budgeted for a 63 per cent increase in spending on oil refineries and petrochemical plants to conform with a national policy to bolster competitiveness.

“Our spending on refining and petrochemical facilities aims to increase the industry’s concentration, upgrade product quality, extend the supply chain and value of products,” chairman Wang Yupu told reporters on Monday.

The energy giant has budgeted a 59 per cent increase in spending on refineries construction and upgrades to 22.8 billion yuan (US$3.3 billion), and 71 per cent more for downstream chemical plants to 15.1 billion yuan.

The combined 37.9 billion yuan outlay forms part of it plan to spend 200 billion yuan between last year and 2020 to form four “world-class” integrated refining and chemical production bases in Shanghai, Nanjing, Zhenhai in Zhejiang province, and Maoming and Zhanjiang in western Guangdong province.

Vice chairman Dai Houliang said the overall refining and chemical capacity of the company will be maintained, amid industry-wide over-capacity.

Sinopec aims to achieve this by shuttering old, small and uncompetitive plants, which will be offset by new capacity from a giant up and downstream integrated complex to be built in Guangdong in a joint venture with Kuwait Petroleum, and other facilities to be constructed in Fujian and Hainan.