Sinopec (0386), as the company is known, may build a refinery in the city of Lianyungang able to process 20 million tonnes of crude oil a year, Qian Qilian, head of the Jiangsu Chamber of Commerce for the Petroleum Industry, said Wednesday. China plans to expand oil-processing capacity 25 percent by 2010 to meet use of gasoline, diesel and chemical raw materials.

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The Lianyungang plant would increase Sinopec's ability to tap demand in a province whose economy expanded 18.8 percent last year, faster than the national rate of 10.7 percent.

"The talks between Sinopec and the local government are still going on," said Qian.

Jiangsu's economy, China's third- largest, expanded to 1.83 trillion yuan last year. The nation's economy, the fastest- growing of any major market, grew at the quickest pace in more than a decade in 2006.

Sinopec said last month it is studying plans to enlarge a refinery in southern China's Guangxi Province.

Guangxi authorities want Sinopec to expand annual capacity at the refinery to three million tonnes from the current 500,000 tonnes, governor Lu Bing said last month.

Sinopec has not decided on the scale of the revamp or the spending, Huang Wensheng, a spokesman for Sinopec, said last month.

PetroChina, the nation's largest oil company, got government backing for a refinery near Sinopec's Guangxi plant in February. The refinery will be able to process 10 million tonnes a year of imported crude from Saudi Arabia, the National Development and Reform Commission, the nation's top economic planner, said.

China may increase crude oil processing capacity to 355 million tonnes by 2010 from 285 million tonnes in 2005, the commission said.

The nation's oil demand will rise 6.8 percent to 7.6 million barrels a day this year, the International Energy Agency, an adviser to 26 oil-consuming nations, said in an April 12 forecast.

China, the world's second-largest energy user, may increase oil imports by 14 percent this year to 3.31 million barrels a day, Sun Yongsheng, deputy chief engineer at the Economic and Technology Research Institute of China Petrochemical, Sinopec's parent, said in Dalian. China's oil imports rose to 13.86 million tonnes in March, a record, according to the Customs General Administration of China.

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