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March 21, 2011
Share ThisUnder the long-term contract, the state-controlled Aramco will supply the refinery with Arabian crude oil, while PetroChina will be involved in marketing and selling of the refined products.
The refinery, to be based in Yunnan Province, will be designed to process almost 200,000 barrels of Arabian crude oil each day and produce high-quality refined products like ultra low-sulfur gasoline and diesel.
The venture seeks to satisfy the growing demand for fuel in China, which is one of the biggest economies of the world. We believe that this project will not only aid in the economic development and enhancement of the energy sector in China, but will also contribute immensely toward reinforcing trade relations between two major countries.
Headquartered in Beijing, PetroChina is engaged in the exploration, development, production and sale of crude oil and natural gas, the refining, transportation, storage and marketing of petroleum products, the manufacture and sale of chemical products, and the transmission of natural gas, crude oil and refined products.
We believe that PetroChina is well positioned to capitalize on the fast-growing Chinese market and the turnaround in commodity prices. However, high-priced gas imports in the face of low domestic gas sale prices and uncertainty regarding the impact of the newly rolled out national resources tax continues to weigh on the stock, compelling us to maintain a long-term Neutral rating. The company competes with peers such as Sinopec Shanghai Petrochemical Co. Ltd. (SHI) and CNOOC Ltd. (CEO).
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