China's largest offshore oil producer, CNOOC, has started construction of a 5-billon-yuan chemical complex in Hainan province, a move that would further boost its investment in southern China.

The 2-million-ton deep catalytic cracking (DCC) project is located in Dongfang and is scheduled to begin operations in 2011, local media reported.

The project will produce propylene, liquefied petroleum gas and naphtha.

South China, especially the Pearl River Delta region, has always been an important region for CNOOC. A large portion of the company's oil reserves is in the South China Sea, analysts said.

The company's projects in the region include a 12-million-ton refinery and an 800,000-ton ethylene production plant. It also has oil reserve capacity of 5 million cu m there.

CNOOC plans to operate its first giant refinery in Huizhou, Guangdong province this month. The 240,000-barrel-a-day plant is now undergoing testing, an official with the company said yesterday.

The refinery was scheduled to start operations by the end of last year, but was delayed due to market uncertainty, the official, who declined to be named, said. Construction of the Huizhou plant began in late 2005. It is CNOOC's first large oil refinery project, involving a total investment of over 20 billion yuan.

The company plans to boost its annual capacity to 22 million tons from the current 12 million during the 12th Five-Year Plan (2011-15) period.

CNOOC's sales revenue in 2008 rose 22.4 percent from a year ago to 98.3 billion yuan. The company's listed arm, CNOOC Ltd, said on Jan 20 that it planned to raise its 2009 crude and gas production by 16-18 percent, when new projects go on stream this year.

CNOOC's total capital expenditure is expected to touch $6.76 billion this year, an increase of 19 percent year-on-year.

Liu Gu, energy analyst with Guotai Jun'an Securities in Shenzhen, had earlier told China Daily that she expected the company's profit to decrease by 20 percent this year, chiefly due to falling oil prices.

Source:China Daily