Sinopec starts up refining unit in Iran's Arak plant

BEIJING Fri Aug 19, 2011 9:23am BST

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BEIJING Aug 19 (Reuters) - Sinopec Engineering Inc. (SEI), an arm of Sinopec Group, started up a unit this week in Iran's Arak refinery, offering a rare clue on the progress the state-run Chinese oil firm is making in the sanctions-hit country.

SEI started a feedstock hydrotreating facility, part of a reforming unit, on Aug. 15, the company said on its website www.sei.com.cn.

A reforming unit produces mostly gasoline, which Iran needs to import despite being OPEC's second-largest crude exporter because its dilapidated refining sector has for years lacked investment.

The one-line post on the SEI website did not give further details.

Iran aims to add 70,000 barrels per day of gasoline-making capacity around 2011/12 at the Arak refinery in the central Iranian province of Markazi, according to analysts and official estimates.

Sinopec officials have mostly kept mum about the company's work in Iran, which is under U.S.-led sanctions due to Tehran's disputed nuclear programme. The Chinese firm's main investment in Iran is a $2 billion deal to develop the Yadavaran oilfield, agreed in late 2007.

Sinopec Corp , Sinopec Group's listed arm, is Asia's largest refiner and buys over half a million barrels of crude oil from Iran a year, making it the world's largest Iranian oil buyer.

From January this year, Sinopec started importing condensate from Iran under a one-year deal. The deal to import the super light crude oil from the South Pars project is worth some $3 billion a year.

Industry sources have told Reuters that the condensate pact is attached to a multi-billion-dollar agreement under which Sinopec would upgrade and build refineries in Iran, including Arak, Isfahan and Abadan.

It was not immediately clear if SEI's starting up of the feedstock hydrotreating facility at Arak is part of that alliance. Such a unit typically strips heavy metal components in feedstock such as naphtha or condensate, to smoothe gasoline production. (Editing by Michael Urquhart)

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