PetroChina and Sinopec, the nation's two leading oil firms, are awaiting final government approval to jointly construct a US$1.6-billion refinery to process Sudanese oil in Southwest China's Guangxi Zhuang Autonomous Region.

PetroChina, which initially proposed the refining project in Qinzhou, a port city of Guangxi, will have a 70-per-cent stake in the new plant, with the remaining 30 per cent going to Sinopec, according to a PetroChina official, who wished to remain anonymous.

The Guangxi project will be the first time the rivals have come together to work on a joint project.

A senior official at PetroChina's refining and marketing division confirmed the partnership with Sinopec, but told China Daily yesterday that the two firms were still awaiting the final nod from the National Development and Reform Commission to proceed with the construction work.

"It is difficult to predict when the government will approve the project," he said, without elaborating.

Pan Wenfeng, a local government official in charge of Guangxi's industrial projects, last month revealed that the Qinzhou refinery would involve a total investment of 13 billion yuan (US$1.6 billion) and was likely to win the NDRC's approval within four to six months. It satisfied the government's environmental requirements in June.

Sinopec, which enjoys a stronger marketing presence in the south than PetroChina, wanted to build a separate 8-million-ton-per-annum refinery in Beihai, a port city 100 kilometres from Qinzhou. Sinopec already operates a small refinery at Beihai with an annual crude-processing capacity of 600,000 tons.

But amid concerns about overlapping investments, the authorities ordered both companies to compromise on a joint plant in Qinzhou, which has a designed capacity of 10 million tons a year, a Sinopec official told China Daily.

The new refining facility in Qinzhou will process oil from Sudan, where PetroChina's parent company produced 16.38 million tons of crude oil and found new reserves of 78.6 million tons last year.

Expected to come online by 2010, the jointly invested refinery will benefit from the huge market demand in southwestern China, as well as the possibility of domestic oil product prices being brought closer to the international level, analysts said.