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Sinopec Qilu builds 120,000 bpd CDU; eyes Apr repairs

Published: 05 Jan 2009 01:23:43 PST

BEIJING, Jan 5 - Sinopec <0386.HK><600028.SS> has started adding a 120,000 barrel-per-day (BPD) crude oil unit in its Qilu refinery in eastern Shandong province, an industry source said on Monday.

The plant would mothball an old 70,000 bpd CDU after the nearly 700-million-yuan ($102.5 million) unit is ready for use by late this year or early next year, said the source.

"It is not easy to start an expansion amid weak market conditions in a place home to a cluster of independent refineries," the source said.

Many state-run refineries have cut operation rates in recent months due to weakening demand and ample fuel stockpiles in the market, but independent refineries, also known as teapot, have beefed up runs as refining margins improved after sizable slumps in oil prices.

Shandong boasts about a quarter of China's independent refining capacity, a swing force in fuel supply since they are more sensitive to profit margin levels than state-run oil firms.

Qilu is also scheduled to start a one-month maintenance from April 15 for a 80,000-bpd CDU, a 1.4 million tonne-per-year (tpy) hydrocracker, a 600,000 tpy continuous reformer as well as other facilities, the source said.

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