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Chinese state-controlled commodity trader Guangdong Zhenrong Energy Co has won approval from the Burmese government to build a long-planned US$3 billion refinery in the Southeast Asian nation in partnership with local parties including the Energy Ministry, company executives said on Tuesday.
The project, which also includes an oil terminal, storage and distribution facilities, would be one of the largest foreign investments in decades in Burma. Burma currently imports most of its fuel.
The Myanmar Investment Committee granted the Chinese firm approval to build a 100,000 barrels-per-day (bpd) refinery in the southeast coastal city of Dawei, Li Hui, a vice president of Guangdong Zhenrong and head of the company’s refining business, told Reuters.
The Chinese firm will hold 70 percent of the project, and the remaining 30 percent will be shared by three Myanmar firms — the military-linked Myanmar Economic Holdings Limited; Myanmar Petrochemical Corp, an entity affiliated with the country’s Energy Ministry; and Yangon Engineering Group, controlled by the privately-run Htoo Group of Companies, Li said.
As the approval came before the government led by Aung San Suu Kyi’s National League for Democracy (NLD) was sworn in, Li said his firm was ready to work with the new Burmese authorities to ensure the project gets off the ground.
“We are confident [about the project] as it has taken into considerations interests from all parties and the refinery will benefit the local people as well as the economic development of the country,” said Li.
Guangdong Zhenrong, which first announced the project in 2011, won the green light from Beijing in late 2014 to proceed with the plan.
The firm, which had a turnover of more than 100 billion yuan ($15.45 billion) in 2013, is 44.3 percent owned by Zhuhai Zhenrong Corp, one of China’s top four state petroleum traders, which was until the late 1990s an affiliate of the military.
Xiong Shaohui, the company’s chairman, has said the project may attract financing from state policy banks such as China Development Bank and China Export & Import Bank, as the investment fits into Beijing’s “marine silk road” policy that aims to connect China to neighbouring economies like Burma, India and Sri Lanka.
It would be the first foray into refining for Guangdong Zhenrong, which is largely a trader of petroleum products and metals, and more recently the operator of oil storage facilities and a shipyard.
Company executives have also said the firm was open to working on the project with established Chinese energy companies.
China’s largest energy group CNPC is among the largest foreign investors in Burma, Asia’s second-poorest nation, having built oil and gas pipelines that connect the two countries.