Qatar's first foray into China's oil market, a joint venture refinery with PetroChina and Royal Dutch Shell, will boast a capacity of more than 200,000 barrels per day (bpd), China Business News said on Thursday.

The complex, which includes a petrochemical facility, would be built at one of China's "large coastal provinces," the newspaper cited Shell China's Chairman Lin Haoguang as saying. The joint venture was signed in June.

"The new joint venture will have a capacity of more than 10 million tonnes (a year)," Lin said, adding that the downstream portion would surpass the scale of a joint-venture petrochemical plant between Shell and CNOOC in Guangdong.

The $4.3 billion Shell-CNOOC Nanhai complex can produce 800,000 tonnes of ethylene and 430,000 tonnes of propylene a year.

"I hope to gain approval from the National Development and Reform Committee (NDRC) by the end of the next year if everything goes according to plan, but it may also take 18 months," Lin told the newspaper.

He said the parties were conducting a feasibility study for the plant.

Under the agreement, PetroChina, Asia's top oil and gas producer, will hold 51 percent in the joint venture, while Shell and Qatar will own 24.5 percent each.

The joint venture followed a similar China-Middle East alliance between Saudi Aramco, Exxon Mobil and Sinopec Corp, which came together to build a $5 billion refinery in Fujian now running Saudi crude.

While Qatar is not as rich in oil as top producer Saudi Arabia, it is the world's top exporter of liquefied natural gas (LNG), an energy source that China is keen to tap further to reduce pollution and diversify its energy mix.

Earlier this year, PetroChina agreed to buy from Qatar 3 million tonnes a year (tpy) of LNG from 2011, while CNOOC has a deal for 2 million tpy of supply from the country from 2009.

(AFX, Nov 20, 2008)