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CHINA'S top energy firm PetroChina is considering building a multi-billion-dollar refinery in Singapore, a local newspaper reported, allowing it to escape Beijing's fuel price controls.
Building a new 400,000 to 500,000 barrel per day (bpd) plant could cost more than US$10 billion (S$14 billion), according to recent cost estimates for similar size projects, but would fit PetroChina's ambition to become a leading fuel trader in Asia.
'It is currently doing a feasibility study and doing due diligence on this...and so far the feedback has been positive,' The Business Times quoted an unnamed source as saying.
Two PetroChina officials contacted said they could not confirm the report, but downplayed its significance.
One said the idea was first raised about three years ago as the oil major sought to sidestep Beijing's lengthy approval procedures for new plants and give it more flexibility to sell surplus products at free market rates much higher than China's fixed pump prices, which have smothered refining margins.
'The idea was to process PetroChina's equity oil overseas and supply refined fuels to China,' said the official.
A second official said the report was talking about something PetroChina may consider doing in the future.
'As far as I know, PetroChina is not doing a feasibility study yet,' said the second official, in charge of PetroChina's trading business in Singapore, without elaboration.
PetroChina's spokespeople were not available for comment.
The Business Times cited another source who said the new refinery would be at least 400,000 to 500,000 barrels per day.
A refinery in Singapore would also give PetroChina more flexibility and power to influence benchmark Asian oil prices, advancing its effort to become a top trader.
Several years ago PetroChina bought a 35 per cent stake in Singapore's US$500 million Universal Terminal, Asia's largest commercial oil storage terminal, which was completed last November.
'Given PetroChina's business profile, it makes sense for them to have an oil refinery in a global pricing hub like Singapore,' the newspaper quoted the second source as saying.
But after several years of major global refinery investment and soaring construction costs, it won't come cheap. Two 400,000 bpd plants due to be built in Saudi Arabia are expected to cost at least US$10 billion each, according to Gulf industry sources. -- REUTERS
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