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CNPC, Sinopec Refining Projects Suspended on Emissions Tests

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Aug. 29 (Bloomberg) -- China National Petroleum Corp. and China Petrochemical Corp., the nation’s biggest oil and gas producers, had their new refining and chemical projects suspended after failing to meet the government’s 2012 pollutant reduction targets.

They can’t seek environmental reviews of new or expansion projects, except for ones that aim to upgrade oil quality or reduce emissions, the Ministry of Environmental Protection said in a statement posted to its website today, without providing a list of projects. China is toughening its stance on oil companies and their emissions to combat the nation’s worsening pollution.

The ministry will assess the companies’ measures to improve emissions in the first half before the suspensions can be lifted, it said.

China Petrochemical, known as Sinopec Group, failed to meet the target on nitrogen oxides emissions, and CNPC failed in chemical oxygen demand, according to the statement. Those measures are used to test pollutant levels in air or water.

Six other state-owned companies chosen for the tests, including Shenhua Group Corp. and China Huaneng Group Corp., met all emission targets, the ministry said.

Sinopec Group accepted the suspension and will invest more money to upgrade equipment to meet the environmental requirements, spokesman Lv Dapeng said in an e-mailed statement today. Over the next three years, it will spend 22.9 billion yuan ($3.7 billion) on 803 improvement projects, according to the statement.

Four Fail

Lv said four subsidiaries in the provinces of Henan, Anhui, Sichuan and Shanghai failed to meet emission standards. Sinopec’s other units, which number about 120, have all met the targets, Lv said.

CNPC will push its units to reduce pollution and meet the target set in the five-year plan ending 2015, the official Xinhua News Agency reported today, citing an unidentified company official.

Two calls to the press office of the ministry in Beijing seeking comment went unanswered today.

CNPC is the parent of Hong Kong-traded PetroChina Co., which dropped the most in two years yesterday after four top executives were removed because of government investigations. Sinopec Group is the parent of Hong Kong-traded China Petroleum & Chemical Corp., known as Sinopec.

PetroChina gained 1.8 percent to HK$8.42 in Hong Kong, while Sinopec dropped 0.7 percent to HK$5.69. The city’s benchmark Hang Seng Index gained 0.8 percent.

To contact Bloomberg News staff for this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net