PetroChina, Shell's $13 billion refinery stalls on land issue: sources

Wed Sep 11, 2013 5:16am EDT
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By Chen Aizhu

BEIJING (Reuters) - Plans for a $13 billion refinery and petrochemical complex in east China have stalled over finding a suitable site for the plant, which could face long-term delays, industry and government officials said.

The PetroChina-led project, in partnership with Royal Dutch Shell (RDSa.L: Quote) and Qatar Petroleum, also faces competition from petrochemicals using U.S. gas as feedstock, a change of strategy from PetroChina (0857.HK: Quote) and opposition from locals.

The project partners began feasibility studies about 14 months ago in a bid to build the 400,000 barrels per day refinery and 1.2 million tonnes (1.1023 ton) a year ethylene complex in the coastal city of Taizhou in the prosperous manufacturing hub of Zhejaing province.

It would be the single largest investment in the refining and petrochemicals sector for PetroChina, Asia's largest oil and gas producer, and a base for it to expand in south China, which is a stronghold of rival Sinopec Corp (0386.HK: Quote).

"The (Taizhou) project is on hold," said an industry official with direct knowledge of the project status, pointing to the need for a massive landfill project.

Finding a suitable site strong enough to erect the massive plant has become a major headache for the partners.

Taizhou authorities have proposed filling in an area that encompasses six mini isles, but the work would cost about 10 billion ($1.6 billion) yuan, about an eighth of the total project cost, said a Chinese executive involved in this landfill project.

A local official told Reuters that the partners had failed to come to a site decision after nearly two years of research and surveying land.   Continued...

A man walks past a PetroChina company logo at its gas station in Beijing August 29, 2013. REUTERS/Kim Kyung-Hoon