Oil and gas producer Sinopec plans to spend CNY53 billion on expanding output, refining capacity and fuel distribution infrastructure in Xinjiang. The plan includes the doubling of refining capacity to 10 million tons to complement its target of producing 9 million to 11 million tons of crude oil in Xinjiang in 2015. It also wants to pump between 1.8 billion and 3 billion cubic meters (BCM) of natural gas that year. Sinopec also plans to increase the number of fuel and gas service stations to more than 800 by 2015, from 307 now. Sinopec’s expansion plan  includes the development of facilities with a total annual capacity to turn coal into 8 BCM of natural gas by 2015, rising to 30 BCM in the longer term. In December, Sinopec signed a preliminary agreement with nine companies, including four major state-owned power generators and three coal producers, to co-invest in two giant gas pipelines. The targeted annual volume of gas is 40 BCM in 2015 and 110 BCM in the long term. The firms aim to pour CNY130 billion into a 7,373 km pipeline to send gas made from coal from Xinjiang to Guangdong and Zhejiang provinces, and CNY80 billion into a 4,600 km pipeline from Xinjiang to Shandong and Jiangsu. PetroChina Vice Chairman Zhou Jiping has forecast that China’s gas consumption would triple to 300 BCM by 2020. In 2010, about 109 BCM was consumed and 96.8 BCM was produced, according to BP’s Statistical Review of World Energy.

BP has obtained approval from the Ministry of Commerce (MOFCOM) to start exploration in the South China Sea in what will be the company’s second deepwater project in China. BP will have a roughly 40% stake in the block during the exploration period and a 20% share when the project has moved into production. CNOOC owns the remainder. In September 2010, BP bought a 41% stake in another block in the South China Sea. China’s growth in energy demand is expected to drop to 1.9% a year between 2021 and 2030 from the average annual increase of 9% in the decade ended 2010, according to Christof Ruehl, Group Chief Economist at BP. He added that China has reached its peak period for rapid growth in the heavy industry sector, and the share of industry in GDP will decline and gradually be replaced by the service sector as the economy matures amid structural economic transformation. BP’s revised Energy Outlook 2030 predicts that non-fossil fuels will account for a growing proportion of China’s energy growth. It will rise to 44% during the period 2020 to 2030. According to BP’s estimates, China’s oil-import dependency will grow rapidly to 80% by 2030, from more than 50% at present, while its reliance on gas imports will reach 42%. China may also turn from being a coal exporter to an importer by 2030, even though the country will see a notable slowdown in the demand for coal. The fuel’s contribution to primary energy growth will fall to 13% in the period between 2020 and 2030, from 48% between 2010 and 2020 as its use in power generation declines, the China Daily reports.

Sinochem has agreed to buy Total’s Tepma unit, which holds a stake in Colombia’s Cusiana field worth 7,000 barrels of oil equivalent (BOE) per day, as well as shares in two pipelines in Colombia. The agreement follows on Sinochem’s move in January to buy a 10% stake in five off-shore oil blocks in the Espirito Santo basin in Brazil. The seller in the deal is the Anglo-French oil company Perenco. Sinochem also brokered a deal last year to buy a 40% stake in Brazil’s Peregrino off-shore oilfield from Norway-based Statoil. The cost of the acquisition was USD3.07 billion, making it the biggest that the company has made abroad. From 2002 to 2010, Sinochem produced 8.72 million tons of oil and gas. Sinochem’s output for 2011 was estimated to be 3.2 million tons. That same year, China National Petroleum Corp (CNPC) produced 106.54 million tons of crude oil. To catch up, Sinochem set the goal of producing 15 million tons of oil equivalent by the end of 2020. Countries in Latin America, Brazil and Colombia in particular, are expected to play large roles in helping it meet that ambition.

China will finish building the second phase of its strategic oil reserve project this year, providing a total storage capacity of 170 million barrels, China National Petroleum Corp (CNPC), said. The second phase will have eight storage bases. The first phase was completed in 2009, with a capacity of 103 million barrels at four facilities in coastal areas. The third phase is scheduled for completion by 2020, which will take the total reserve capacity to 500 million barrels. The reserves are intended to reduce the risks that arise from volatile crude oil prices and a growing reliance on imports. Net oil imports by China rose 7.7% last year to 264 million metric tons. The import-dependency rate reached a new high of 56.3%. CNPC projected that domestic oil demand would grow 5% to 493 million tons in 2012, with net crude oil imports up 6.4% to 266 million tons. CNPC Researcher Chen Rui projected that the price of West Texas Intermediate crude would average USD100 a barrel in 2012, compared with USD95 last year. CNPC said that China’s natural gas consumption would surpass 150 billion cubic meters (cu m) in 2012. Domestic demand would reach 110 billion cu m, while imports would be 45 billion cu m.

China has mapped out a Five Year Plan (2011-15) for the petrochemical industry that will see the country form as many as four refining bases in the coastal regions, each with a refining capacity of 20 million metric tons by the end of 2015. The country also plans to set up three ethylene production bases, with a production capacity of 2 million metric tons each, over the same period, according to the plan released by the Ministry of Industry and Information Technology (MIIT). Figures from China National Petrochemical Corp (CNPC), the country’s biggest oil refiner, show that the country had 17 refineries with at least 10 million metric tons of refining capacity. The annual processing capacity of crude oil would be raised to 600 million metric tons by 2015, compared with 450 million tons last year. Analysts said China will consolidate its refineries by focusing on establishing large-scale facilities and shutting down smaller units that have obsolete refining capacity. MIIT estimates that oil product demand will reach 320 million tons by the end of 2015, with a compound annual growth rate of 5.5% in the five years starting from 2011, down from 7.8% annually in the previous Five Year Plan period, which ended in 2010. Lu Ying, Analyst from the oil market service provider oilgas.com.cn, said that China’s gasoline demand may maintain an average annual growth rate of around 3% to 4% within the five years, similar to the rate seen during the previous Five Year Plan period. Diesel demand is also likely to see a weaker increase, while the major demand will be in jet fuel.