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China and Russia ink PetroChina-Rosneft Orient Petrochemical

CNPC and Rosneft plan Tianjin Refinery and Chemical

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe State-owned China National Petroleum Corporation (CNPC or PetroChina) and the Russia oil and gas champion OAO Rosneft (Rosneft) signed an agreement on the design and construction planning of the Tianjin Refinery and Petrochemical complex to be built through their joint venture PetroChina-Rosneft Orient Petrochemical Tianjin Company in the China eastern Province of Tianjin.

The signature ceremony of the agreement between CNPC and Rosneft was held during the visit of the President Putin in China in May 2014.

PetroChina-Rosneft_Orient_Petrochemical_Tianjin_Refinery_MapOn November 2006, Rosneft and PetroChina signed the first agreement to establish a joint venture for the Tianjin Refinery and Petrochemical complex.

In October 2007, Rosneft and PetroChina established this joint venture under the name of PetroChina-Rosneft Orient Petrochemical Tianjin Company Ltd (Tianjin Refinery).

In this Tianjin Refinery joint venture the working interests are shared between:

 – PetroChina 51% is the operator

 – Rosneft 49%

To be located in the Bohai Bay, the Tianjin Refinery is expected to supply the fast growing and industry intensive Provinces of eastern China in transportation fuels and hydrocarbon products.

The purpose of this joint venture is for China to secure the sourcing of crude oil, from Russia in this case, and for Russia it brings a opportunity to increase its export of crude oil with long term agreement against prepayment.

At that time PetroChina and Rosneft were intending to supply crude oil the Tianjin Refinery by pipeline from Thaishet in Russia to Tianjin through Daqing in the northeast of China.

But all Rosneft and PetroChina studies for the construction of such a pipeline were leading to costs compromising the entire Tianjin Oriental Refinery project.

PetroChina-Rosneft Orient Petrochemical at feasibility

After investigating all alternative solutions, a new agreement was signed in 2010 defining the delivery to the Tianjin Refinery by tankers from Russia to the Port of Tianjin and then through a 42 kilometers inlet pipeline to the site.

In Tianjin, PetroChina and Rosneft selected a site in the Nangan Industrial zone to build the PetroChina-Rosneft Orient Petrochemical Tianjin integrated refinery.

This Tianjin Refinery should have refining capacity of 13 million tonnes per year (260,000 barrels per day) of crude oil out of which 9.1 million tonnes shall be sourced from Russia.

PetroChina-Rosneft_Orient_Petrochemical_Tianjin_RefineryThe refined crude should be light for 80% of the capacities.

In addition to the refinery, the petrochemical complex should include:

 – Aromatics production units

 – Pyrolysis plant

 – 300 gas stations for the distribution of the transportation fuels

With these gas stations, PetroChina is targeting to compete with its historical local rival Sinopec in the Northern and Eastern China Provinces such as Beijing, Changzhi, Hebei, Jinan, Liaoning or Shandong.

The Tianjin Refinery is budgeted to require $4.6 billion capital expenditure.

According to the terms of the agreement signed in May 2014, PetroChina and Rosneft finalized the planning for the whole construction program in beginning with the feasibility study and the preparation of the documents for regulatory approval in expecting the first production in 2020 for the PetroChina-Rosneft Orient Petrochemical Tianjin refinery project.

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