Oil Report

UPDATE 1-INTERVIEW-PetroChina Jinzhou plans April maintenance

BEIJING, March 11 (Reuters) - PetroChina's 0857.HKPTR.N Jinzhou refinery plans to shut half its crude capacity and relevant secondary facilities for about a month in mid-April for regular maintenance, the plant's head said on Tuesday.

But the plant’s goal of crude throughput for 2008 will be largely unchanged from last year’s 6.8 million tonnes, Pei Hongbin, president of PetroChina Jinzhou Petrochemical Company, told Reuters on the sidelines of China’s parliament meeting.

Jinzhou has crude processing capacity of 7 million tonnes per year.

It was adding a 1.3 million-tonne-per-year hydrocracker that costs 800 million to 900 million yuan ($113-127 million) and is expected to be fully operational by 2010, Pei said.

“With the facility on line, all our oil products will meet state-set quality standards which are equivalent to Euro III levels,” he said.

A hydrocracker produces low-sulphur aviation fuel and diesel.

“An experimental facility, with 300,000 tpy capacity, also churns out fuels up to Euro IV standards that are shipped to Beijing,” Pei said.

The Chinese capital led the country in adopting Euro IV fuel standards at the beginning of this year as a measure to clean its smoggy skies before the Olympics, while the rest of the country was required to adopt Euro III by the end of next year.

Euro IV fuel permits 50 parts per million (ppm) of sulphur in gasoline and diesel while Euro III allows 150 ppm in gasoline and 350 ppm in diesel.

Pei said that, despite surging crude oil costs, Jinzhou managed to make a small profit in 2007 by processing a larger volume of cheaper acidic and heavy oil, producing more value-added chemical products, and other measures.

But the plant would not remain in the black if crude oil prices CLc1 hovered at current levels of more than $100 a barrel for the rest of the year, Pei said.

“We will definitely lose money, although I have not made an estimate of how big the loss would be,” he said.

Around 80 percent of the plant's crude oil is from PetroChina's 601857.SS Liaohe and Daqing oilfields, with the rest from overseas. ($1=7.104 Yuan) (Reporting by Jim Bai; Editing by Edmund Klamann)