Reports: China’s CNPC, Yunnan ink refining agreement, part of plans for Myanmar pipeline

By ELAINE KURTENBACH,

AP

Posted: 2007-12-03 00:48:21

SHANGHAI, China (AP) – China National Petroleum Corp., the country’s biggest oil and gas producer, has signed an agreement with the southwestern province of Yunnan to cooperate in oil refining, a step toward building a pipeline to neighboring Myanmar, reports said Monday.

The agreement, signed Sunday in Beijing, calls for CNPC and Yunnan to cooperate in building an oil refining base in Yunnan, a landlocked province that has suffered from fuel shortage partly due to its lack of refining facilities, the official Xinhua News Agency reported.

If approved by the central government, the refining base would have an annual capacity of 10 million tons a year. State-owned CNPC is also planning to build a 1 million ton-a-year ethylene refining facility, the report said.

The agreement will play a significant role in coordinating plans for design and construction of an oil pipeline to neighboring Myanmar, Dow Jones Newswires reported, citing an unnamed executive with PetroChina, CNPC’s publicly traded unit.

Initial plans call for the oil pipeline to run from Myanmar’s western port of Sittwe to Kunming city in Yunnan. Its initial capacity will be 20 million metric tons a year, equivalent to around 400,000 barrels a day, the report said. The crude oil pipeline is still in the design phase, and no timetable for construction has been fixed, Dow Jones cited the PetroChina official as saying.

The refinery project presumably would require approvals from China’s economic planning agency, the National Development and Reform Commission, and from the State Environmental Protection Agency. The reports made no mention of endorsements for the plan from the State Council, China’s Cabinet, or from those two agencies.

China, eager to reduce its growing dependence on oil shipped via the Strait of Malacca from the politically volatile Middle East, has been cultivating alternative supply routes.

According to state media reports, China plans for the pipeline from Myanmar to eventually reach Chongqing, a huge industrial hub to the northeast of Yunnan.

The refinery plan calls for construction of several oil products pipelines linking cities in Yunnan, which is a subtropical, largely agricultural province.

“This is a great event for the Yunnan people and for Yunnan’s economic development,” the Kunming local newspaper Chuncheng Evening News cited top provincial officials as saying.

CNPC also agreed to develop bio-diesel production in Yunnan, the reports said.