Executive: China Independent Oil Refiners Set Up $5B Joint Venture
BEIJING, Oct 11 (Reuters) - A group of six Chinese independent oil refiners set up a 33 billion yuan ($5 billion) joint venture to compete with state-owned giants and the rise of private chemical giants, a senior executive at one of the partners said.
The new alliance, called Shandong Refining & Chemical Group, gathers six independent oil processors and a provincial government-backed fund as investors, and was registered in late September, said Zhang Liucheng, a vice president of Shandong Dongming Petrochemical Group.
Dongming, China's largest independent refiner, is the venture's biggest stakeholder with 22.63 percent. The number of investors, though, is much smaller than the around 20 independent, or "teapot", refiners expected earlier by the two initiators Shandong Dongming and the Shandong Qingyuan Group.
The other four refiners are Shandong Tianhong Chemical, Shandong Shouguang Luqing Petrochemical, Wudi Xinyue Fuel and Chemical, and Shandong Shengxing Chemical. Jiangsu Xinhai Petrochemical, a Dongming subsidiary, also owns a stake.
A fund managed by Shandong province-backed Shandong Marine Group owns 22.59 percent and is the second-largest shareholder, said Zhang.
Members of the alliance are expected to coordinate their production, marketing, crude oil imports and investments.
The seven oil plants owned by the six partners have government approved crude oil quotas totalling 23 million tonnes a year, or about 460,000 barrels per day (bpd).
The group as a whole has a refining capacity of 32.6 million tonnes a year or 661,000 bpd.
The group plans to pool funds and resources to produce fuels and chemicals more efficiently as they battle stiff competition in an increasingly saturated market and under tightened environmental and tax scrutiny.
The alliance is planned as an upgrade on a crude buying federation set up by a larger group of independent plants in early 2016. That effort has had little success.
($1 = 6.5972 Chinese yuan)
(Reporting by Meng Meng and Chen Aizhu; Editing by Tom Hogue)
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