PetroChina Yunnan refinery to be operational by June

PetroChina's petrol station is pictured in Beijing, China, March 21, 2016. [Photo/Agencies]

China National Petroleum Corp, the country's largest oil and gas producer, aims to start operating its new refinery in the country's southwestern Yunnan province by June, an auxiliary project of the China-Myanmar crude oil pipeline.

The first batch of refined oil products is due in early September, said Yu Mingxiang, a senior engineer at PetroChina Yunnan Petrochemical Company Limited.

The refinery is expected to produce 3.76 million metric tons of gasoline, 5,48 million tons of diesel and 1.2 million tons of jet fuel each year, Yu said during a news conference in Beijing on Thursday.

The plant, with a total investment of 30 billion yuan ($4.4 billion), will bring Yunnan from the end of the supply chain to a leading position in refinery chemical production, he said.

With a crude processing capacity of 13 million tons per year, the operation of the Yunnan refinery will also meet demand in neighboring Sichuan province as well as South Asian and Southeast Asian countries, further facilitating oil and gas cooperation between China and economies participating in the Belt and Road Initiative, said CNPC spokesperson Qu Guangxue during the meeting.

According to Li Li, energy research director at ICIS China, a consulting company that provides analysis of China's energy market, the plant will help extricate the landlocked province from a fuel shortage partly due to its lack of refining facilities.

On the other hand, the pipeline also diversifies China's oil and gas imports, which will no longer have to pass through the Malacca Straits, a narrow channel that connects the Indian Ocean with the Pacific Ocean.

The pipeline transmission safety level is much higher than shipments by sea, which will ensure a stable energy supply to China, and the economic benefits are expected to keep growing as deliveries increase, she said.

China and Myanmar signed an agreement in April on a crude oil pipeline starting in Myanmar's Made Island and ending in Yunnan province, the latest energy cooperation between the two countries to send oil from Myanmar's Kyaukpyu Port to Yunnan.

The first oil tanker, Suezmax, later offloaded 140,000 tons of crude at Made Island oil port, and CNPC pumped the first crude oil through the China-Myanmar oil pipeline last month.

According to Yu, the company has invested more than 3.8 billion yuan in environmental protection for the project, accounting for 13 percent of the total investment, which has substantially helped reduce emissions of dust, smoke and sulfur dioxide.