In order to expand fuel and chemical output in southwestern China, PetroChina Co Ltd, the largest oil company of the country, plans to build a refinery and ethylene plant at a cost of more than 50 billion yuan ($6.5 billion) in Sichuan province.

An agreement for the project will be signed by the authorities of PetroChina and Sichuan government that includes the refinery and chemical project in the provincial capital of Chengdu.

The refinery will process about 200,000 barrels of oil a day. The ethylene cracker will make 800,000 metric tons of the chemical annually.

The oil companies in China are increasing their refining and chemical production in order to meet demand in the world's fastest-growing major economy.

China wants to increase its oil-processing capacity by 25 percent and double the ethylene production capacity by 2010 to reduce the imports of the chemical.

PetroChina is planning to build a $2.6 billion plant in that Shaanxi Province to make ethylene, which is used to manufacture synthetic fibers. The plant will have annual output of 1 million tons of ethylene.

The company had also started the construction of a 15.2 billion yuan refinery in Qinzhou, a city in southwestern China's Guangxi Province. The plant will be able to process 10 million tons of crude a year.

PetroChina processed 785 million barrels of crude into fuels last year, an increase of 4.3 percent from 2005. Its ethylene production last year rose 9.5 percent to 2.07 million tons.
PetroChina's Sichuan project would be among the largest investments of its kind in Asia.

Saudi Arabian Oil Co, Exxon Mobil Corp. and China Petroleum & Chemical Corp. have agreed to triple the output at a refinery in southeast China and build new chemical plants.

Reliance Petroleum Ltd is spending $6.1 billion on building a 580,000 barrel-a-day plant next to its 660,000 barrel-a-day facility at Jamnagar in Gujarat state, making it the world's largest refining complex on one site.