With China's auto market booming, the oil refining industry is falling over itself to boost capacity in coastal region.

Sinochem Corporation is the latest out of the starting blocks. Its new oil refining project in southeastern Fujian Province will see it move into territory already occupied by three industry heavyweights -- Sinopec, China's largest oil refiner, China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC).

Located near the China National Petrochemical Corporation (Sinopec)-Exxon Mobile joint oil refining and ethylene project, the Sinochem project, which will be completed in 2010, will initially have an annual refining capacity of five million tons of heavy oil.

Sinopec, the national leader, plans to expand the annual capacity of its three oil refineries in Guangzhou, Maoming and Zhanjiang cities of Guangdong Province from the current 26.2 million tons to 36 million tons by 2010.

A joint 15 million-ton Sinopec-Kuwaiti project will also come onstream by 2010.

Sinopec is also involved in a project with CNPC in south China's Guangxi Zhuang Autonomous Region. The two giants have agreed to jointly invest in a project refining oil produced by the CNPC in Sudan.

Not to be left out, CNOOC began building a wholly-owned oil refinery in Huizhou City of Guangdong last December. The 12 million-ton project will go into production in 2008.

Analysts expect further expansion of China's oil refining capacity once the refined oil product market is fully opened at the end of the year.

China's coastal area, located near the nation's most economically prosperous region and boasting good transportation infrastructure, is a prime location for oil giants.

With the auto market booming, China's consumption of gasoline is expected to reach 51 to 52 million tons this year and rise to 65 million tons in 2010, according to estimates.

Despite all the projects currently in operation or under construction, it will be hard to match the pace of China's sharply rising demand for refined oil products.

Around the world, much oil refining equipment is working to capacity, and China has become a very attractive region in which to invest in oil refining, according to industrial insiders.

In Europe and America, strict environmental requirements make it harder for companies to set up new plants. The resource-rich Middle East could be a rival to China, but the unstable political situation there has diluted the region's attractiveness in investors' eyes.

According to the National Development and Reform Commission (NDRC), China will add over 90 million tons of annual oil refining capacity by 2010 and eliminate some 20 million tons of low-efficient capacity.

(Xinhua News Agency November 24, 2006)