By Chen Aizhu
BEIJING, Sept 11 (Reuters) - Plans for a $13 billionrefinery and petrochemical complex in east China have stalledover finding a suitable site for the plant, which could facelong-term delays, industry and government officials said.
The PetroChina-led project, in partnership with Royal DutchShell and Qatar Petroleum, also faces competition frompetrochemicals using U.S. gas as feedstock, a change of strategyfrom PetroChina and opposition from locals.
The project partners began feasibility studies about 14months ago in a bid to build the 400,000 barrels per dayrefinery and 1.2 million tonnes a year ethylene complex in thecoastal city of Taizhou in the prosperous manufacturing hub ofZhejaing province.
It would be the single largest investment in the refiningand petrochemicals sector for PetroChina, Asia's largest oil andgas producer, and a base for it to expand in south China, whichis a stronghold of rival Sinopec Corp.
"The (Taizhou) project is on hold," said an industryofficial with direct knowledge of the project status, pointingto the need for a massive landfill project.
Finding a suitable site strong enough to erect the massiveplant has become a major headache for the partners.
Taizhou authorities have proposed filling in an area thatencompasses six mini isles, but the work would cost about 10billion ($1.6 billion) yuan, about an eighth of the totalproject cost, said a Chinese executive involved in this landfillproject.
A local official told Reuters that the partners had failedto come to a site decision after nearly two years of researchand surveying land.
"The best land has long been taken by companies likeSinopec...If (companies) are keen to capture the local market,they will need to pay a higher price now than before," said theofficial.
Last month, a senior Zhejiang provincial official urgedinvestors to decide on the site selection as soon as possible,according to a report on the provincial government's website.
CHANGING ECONOMICS
Industry veterans said a delay on the project might fit achange in strategy by PetroChina to scale down on downstreambusinesses, where it has less experience and which face economicchallenges.
The project is designed to feed on Qatar's abundantcondensate, a light crude ideal for making petrochemicals, butthe U.S. gas-based petrochemicals could be a tough competition.
"A more likely reason for delay might be economics, whichhave become less favourable for such an investment," said anindustry veteran who was involved in negotiating a similarproject with Sinopec.
PetroChina is expected to hold a 51 percent stake in theproposed plant, while Shell and Qatar Petroleum would each hold24.5 percent.
Hit by scandal with five of its top executives put undercorruption probe, PetroChina's new management has vowed to focuson quality rather than scale, having cut spending sharply onrefining and petrochemical business in the first half of 2013.
The Taizhou project also faces resistence from localresidents concerned about worsening pollution.
The Telegraph newspaper earlier reported that plans for theplant had been shelved after it had lost political support.
A Shell spokesperson said the project's feasibility is stillongoing, while a PetroChina investment relation official said hehad no information on the project's progress.
"We hope PetroChina's determination to use Taizhou as a basefor its south China strategy is unshaken. Zhejiang province isgreat market and all its products can be consumed locally,"saidthe local official.
