China National Petroleum Corp (CNPC), the nation’s largest oil producer, has won the official green light to build a refinery for 15.2 billion yuan ($2 billion), the company said.

The refinery, to be located at Qinzhou city in the Guangxi Zhuang region, will have an annual processing capacity of 10 million tonnes, the largest in southwest China, said a statement posted on the company’s website.
“It is expected to come on stream before 2008 and play a crucial role in the country’s new energy grid,” the National Development and Reform Commission, which approved the project, was quoted by the China Daily as saying.
Sinopec, the country’s biggest refiner and a major rival of CNPC, admitted the refinery may impose some competition as it will reduce CNPC fuel transport costs to the region and make retail prices more flexible, the report said.
Sinopec planned to build an eight-million-tonne refinery in the same region but failed to obtain approval from the commission, it added.
“Guangxi plays an important role in serving as a bridge to import crude oil and export oil products to Southeast Asian markets,” said Han Wenke, director of the commission’s Energy Research Institute.
“That is why the two firms are competing to have a foothold there,” he added.
According to CNPC’s statement, the refinery, which will mainly be supplied by crude oil pumped out of the company’s overseas fields, will be targeting primarily the southwestern market.