PetroChina's Dalian refinery, one of China's largest by capacity, has added a major diesel unit as part of a wider expansion program, and expects to process its first Saudi crude oil in September, industry officials said. The firm completed last week a 120,000 barrels per day (bpd) hydrotreating facility for diesel and kerosene, one of six major secondary units to fully match its primary crude processing capacity of 400,000 bpd, they said. But the full operation of the new hydrotreating unit - a facility that strips sulphur off refined fuels - will have to wait for completion of others such as a sulphur recovery unit that may take another few more months, said one official. Technology for the hydrotreating unit is supplied by Shell, he added. The complex, located in the northeast port city of Dalian, is also scheduled to start its most sophisticated processing unit - a 71,000-bpd hydrocracker supplied by US firm UOP, around September, after repeated delays due to surging global orders for refining facilities. A hydrocracker turns heavy oil into light transportation fuels and allows a refinery to run heavier, higher-sulfur and relatively cheaper crude. Once the hydrocracker is on line, Dalian will start processing Saudi crude under a one-year supply contract with Saudi Aramco for Arab light cargoes. The Saudi oil deal is part of a broader pact the world's top oil producer reached with the second-largest oil consumer early this year, said a second official. He did not give a volume for the contract. China has agreed to boost crude imports from Saudi Arabia by nearly 40 percent this year, or about one-tenth of China's total oil consumption. By late this year, the Dalian refinery, a unit of the second-largest Chinese refiner, PetroChina, will have the capacity to process 15.5 million tons of high-sulfur crude a year, China Petroleum Daily said on Thursday. The massive expansion, costing 10.7 billion yuan ($1.5 billion), include a 200,000-bpd crude unit which was started in March 2005 and six secondary units, the paper said. The six units are a 120,000-bpd diesel hydrotreater, a 71,000-bpd hydrocracker, a 60,000-bpd residue desulfuriser, a 44,000-bpd reforming unit, a 270,000 ton-per-year sulfur recovery unit and a hydrogen plant. __
