May 25 (Bloomberg) -- China may increase its annual crude-oil refining capacity by 50 percent in the next five years to meet rising demand in the world’s fastest-growing major economy.
The country may be capable of processing 750 million metric tons of crude oil a year by the end of 2015, from about 507.5 million tons at the end of 2010, China Petrochemical Corp., or Sinopec Group, said in a report today.
“This is an aggressive expansion of refining capacity, but I think China will generate enough demand over the next five years to justify this, particularly in the car and gasoline market,” said Wang Aochao, head of China energy research at UOB-Kay Hian Ltd. in Shanghai. “There are concerns about overcapacity now in refining, but I’m an optimist and I think this increased level of demand will come.”
Gross domestic product grew 11.9 percent in the first quarter, the fastest pace in almost three years. Exports of goods including machinery and electronics increased 30.5 percent last month, beating economists’ estimates and spurring factory fuel consumption.
“China’s economy will continue to rise rapidly for a certain period of time,” Sinopec Group said. “There is still room for car ownership in China to further increase, potentially boosting demand for oil products.”
General Motors Co.’s Chinese minivan and pickup truck venture plans to increase production capacity by almost 50 percent through the end of 2012 as it begins selling sedans in the world’s largest auto market. GM is the biggest foreign automaker in China.
Still, the country should control the pace of refinery investment to avoid a supply surplus, Sinopec Group said.
The share of foreign participation in China’s domestic refining capacity may rise to 31.5 million tons annually, or 4.2 percent of the nation’s total, by 2015, from the current 10.5 million tons, it said.
Crude oil imports may reach a record this year, according to a Feb. 4 estimate by China National Petroleum Corp., the country’s biggest oil company. China may have to rely on imports to meet as much as 70 percent of its crude oil needs in the next decade, Sinopec Group said.
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