China National Petroleum Corp (CNPC), the country's largest oil company, signed an agreement on Wednesday with Nippon Oil Corp to build a refinery to tap the growing Asian demand.
The two companies signed a memorandum of understanding in Tokyo on a joint venture project. It will have a processing capacity of 115,000 barrels a day, the CNPC said.
The two also signed an agreement to use the Japanese refiner's surplus capacity. Nippon Oil has increased the amount of oil it refines for CNPC to 70,000 barrels per day, from 20,000 barrels per day in 2004, CNPC said.
It said the cooperation with Nippon Oil is "the largest cooperation program between China and Japan in the energy area in recent years".
A spokesman for the company yesterday declined to disclose the financial details.
Nippon Oil said the refining venture would be in Osaka, and CNPC will take a 49 percent stake. CNPC will be in charge of crude procurement and product sales, and Nippon Oil will be in charge of operations and management, Nippon Oil president Shinji Nishio said.
The venture is expected to start in April next year, Nishio said.
Analysts said the deal will increase CNPC's oil refining capacity to better meet increasing domestic demand. The company plans to increase its share of the domestic oil refining market to 45 percent by 2020 as demand for fuels and chemicals rise.
The State-controlled oil company will more than double its annual refining capacity to 300 million tons by 2020, about 6 million barrels a day, Shen Diancheng, vice-president of PetroChina, the listed arm of CNPC, said earlier.
