Jan 20, 2012

Chinese energy company eyes $2.5b refinery near Dawei

China’s Guangdong Zhenrong Energy Co, an oil and commodity trader partly owned by state-run Zhuhai Zhenrong Corp, is scouting for sites in Myanmar to build a 100,000 barrels-per-day (bpd) refinery, the company’s chief executive said.
The project, estimated to cost US$2.5 billion, is likely to be located in the southern port city of Dawei and built by 2015, chief executive Xiong Shaohui told Reuters by telephone from the company’s headquarters in southern Guangzhou.
He did not elaborate, and it was not immediately clear if the project would be built in the multi-billion-dollar Dawei Special Economic Zone, which, once complete, will be Southeast Asia’s largest industrial area and a vital source of revenue for a government seeking to overhaul Myanmar’s economy.
“We’re inspecting for the potential sites and have tentatively selected southern port city Dawei, near the Andaman Sea,” Xiong said.
Guangdong Zhenrong will partner with two Myanmar firms – privately run Htoo Group of Companies and a military-affiliated company that Xiong did not name.
The project will be totally funded by the Chinese firm and Xiong said his company would have no problem footing the bill.
The proposed refinery is tiny by Chinese standards but could meet 60 percent of the Myanmar market’s demand for refined fuel, said Xiong. Myanmar has a total refining capacity of 51,000bpd, and it imports almost all of its domestic fuel needs.
The 250-square-kilometre, $50-billion Dawei project will include an $8 billion deepsea port, an oil refinery and a petrochemical factory, Myanmar officials have said.
The project is spearheaded by Thai building contractor Italian-Thai Development and is scheduled to be ready by 2019. It is located in the Tanintharyi Region of southern Myanmar.
Xiong said he was confident the refinery would not encounter any opposition.
“The way we run our business will be different from many other companies investing in Myanmar. We want to make inputs first,” he said.
“First of all, we want to train hundreds of local workers, bring in the first-class refining technology and make sure our partners are happy working with us.”
Guangdong Zhenrong, which recorded an annual turnover of 16 billion yuan ($2.53 billion) in 2010, is partly owned by Zhuhai Zhenrong Corp, one of China’s top four state petroleum traders that was until the late 1990s an affiliate of the military.
On the company’s website (www.gdzhenrong.com), Guangdong Zhenrong said its other stakeholders have “powerful administrative resources and expansive platforms”. It gave no further details.
The proposed refinery, which may process crude oil from the Middle East and Asia, would be the first foray into the refining business for Guangdong Zhenrong.
Xiong, who used to manage Chinese oil firms’ trade quotas at the Ministry of Commerce, said the refinery project was not linked to top Chinese energy group CNPC’s business in Myanmar.
CNPC, parent of PetroChina, is laying oil and natural gas pipelines that connect Myanmar with China’s southwestern province of Yunnan, a landlocked region that is short of energy resources.
In addition to the proposed refinery, Guangdong Zhenrong is building 100,000 cubic metre (630,000 barrels) refined fuel storage tanks in Yangon, which are expected to be complete around April this year when the monsoon ends, said Xiong.

Source: Reuters