Sinopec eyes second refinery deal with Saudi Aramco

BEIJING, March 7 (Reuters) Asia's top refiner, Sinopec Group, hopes to finalise within the year a deal with Saudi state oil giant Saudi Aramco to run a second joint-venture refinery in China's eastern Shandong province, a company executive said on Wednesday.

The Middle Eastern company would take a 25 percent stake and supply crude to the new Qingdao refinery, Du Guosheng, assistant general manager of Sinopec, told reporters on the sidelines of China's legislative meeting.

Du, also chairman of Sinopec's Qingdao Petrochemical Co., said he did not see any obstacles to the deal with Aramco after the two recently agreed to expand an existing refinery in Fujian in southern China and form a fuel marketing venture.

Saudi Aramco and U.S. oil major Exxon Mobil each own a 25 percent stake in the Fujian refinery, while Sinopec owns 50 percent.

Du said Sinopec had started installing equipment at the Qingdao refinery but did not say when the facility would be ready for processing crude.

Sinopec Group is the parent of Sinopec Corp. , which is listed in Hong Kong, Shanghai and New York.

Industry officials told Reuters that China had agreed to increase purchases of Saudi crude oil in 2007 by about 44,000 barrels per day, or 9 percent, from last year.

Saudi Arabia was China's largest crude supplier in 2006, with shipments to the mainland totalling 23.87 million tonnes.

Du also acknowledged that the Huangdao strategic oil reserve tanks, which are adjacent to the Qingdao refinery, would be ready for filling in June this year, but he declined to comment on where the crude would be sourced or when filling would begin.

Huangdao is part of China's first batch of tank farms that will hold more than 100 million barrels of crude.

Huangdao, with a planned capacity of 18.9 million barrels, was previously scheduled to be ready for use by the end of 2008.

REUTERS PV PM1403