PetroChina's newly expanded Dalian refinery will receive its first Saudi crude cargo next month and will become a regular buyer of oil from the world's top exporter, a Beijing-based trading source said on Monday. The arrival of the relatively cheaper, high sulfur crude comes slightly ahead of an earlier schedule of around September. Increased demand from the refinery will further push up China's crude imports from Saudi, which in the first half already sold 36 percent more oil to the world's second-largest oil userm at 653,000 barrels per day, or 9 percent of China's oil demand. The refinery, in the northeastern port city of Dalian, is slated to receive a very large crude carrier (VLCC), roughly 2 million barrels, of Saudi Arab Light crude in late August, said the trading source, who is familiar with the plant's crude imports. It will be followed by at least one such shipment each month for the remainder of the year, said the source, in line with a long-term supply agreement reached at end of last year. The Saudi cargo follows Dalian's first intake of Kuwaiti crude last week, which the plant will start processing next month, as reported by China Petroleum News, an in-house paper run by PetroChina's parent CNPC. “The arrivals of both Kuwaiti and Saudi oil mean Dalian should be technically be fully ready to take high sulphur oil,” the trading source told Reuters. The refinery, the largest operated by top Chinese oil and gas firm PetroChina, is in the final stages of a 10.7 billion yuan ($1.6 billion) expansion program that will double its capacity to 400,000 barrels per day. One key refining unit, a new 71,000-bpd hydrocracker supplied by US firm UOP, is expected to be ready for operation next month, said the trading source. A hydrocracker strips sulphur from refined fuels. The plant will likely maintain its processing rate for August at July's peak level of around 270,000 bpd, rather than raising output sharply, said a company source, because it takes time to bring the new hydrocracker to full capacity. Dalian is the second major Chinese refinery this year to join the ranks of coastal plants processing Saudi oil, which ranks second in terms of volume sold to China after Angola. In May, rival state refining giant Sinopec Group, parent of Sinopec Corp, started taking Saudi crude for its new 200,000-bpd Qingdao refinery in eastern Shandong province. The Saudi shipments to the two plants are part of a one-year pact reached between China and Saudi Arabia for a 38 percent increase in supply for 2008 versus 2007 at about 720,000 bpd, roughly 8 percent of Saudi's total output.
