Total in talks with PetroChina to sell China refinery stake

July 3, 2014

France's Total is in talks with PetroChina to sell its stake in a Chinese refinery after nearly two decades of investment, in what could be the latest foreign energy firm giving up on a vast but tightly regulated oil market in China.

Early this year, sources said BP was dropping plans to invest in another PetroChina refinery in South China, mirroring the moves of several other projects that worried about a slowdown in growth in the world's second-largest economy.

Total was the first foreign firm to get a toehold in China's refining business, as an investor in the 200,000 barrels-per-day West Pacific Petrochemical Corp (WEPEC) in the northeastern port city of Dalian in the mid-1990s. The plant was then designated as the country's first and only export-oriented refinery.

The French firm owns 22.4 percent of the plant which started operations in 1996. It's jointly owned by State-run Sinochem Corp and firms backed by the Dalian city government, but PetroChina manages and operates it.

Industry officials familiar with WEPEC's operations said the French firm has decided to divest the refinery stake due to years of losses the plant incurred, and also due to lack of access to the local Chinese market.

"Exports of most of WEPEC's fuel are making losses, due to heavy taxes levied," said an industry official with direct knowledge of WEPEC's fuel marketing.

Copyright, China Daily, 2014.