China National Petroleum Corporation (CNPC) is considering to create an oil refining joint venture with Japan's Nippon Oil Corporation, said sources from CNPC, China's largest oil producer on Wednesday.

According to the letter of intent signed by both companies during Chinese President Hu Jintao's visit to Japan, the two will select an oil refinery in Japan of daily oil refining capacity of 115,000 barrels.

The oil refining joint venture will be the largest cooperative project between China and Japan in the energy field, said CNPC.

Headquartered in Tokyo, Nippon Oil is the largest petroleum corporation in Japan.

Sources from CNPC did not disclose details about the target oil refinery, shares, investment and crude sources of the project.

The target market will be Asia, especially China, with growing thirst for refining oil products, said Zha Daojiong, a professor of the International Relations College of the Beijing University.

CNPC signed another agreement with Nippon Oil on Wednesday. Under the agreement, the Japanese company will refine 3.5 million tonnes of crude oil for CNPC in fiscal year of 2008.

Nippon Oil has undertaken oil refining services for CNPC since 2004 with a daily capacity of 20,000 barrels. The new agreement will increase the daily oil refining volume to 70,000 barrels, said CNPC.

China's booming economy and state ceilings on domestic oil products prices have boosted the country's demand for oil products.

According to statistics, China's 'apparent consumption' of oil products composed of gasoline, diesel and kerosene rose by 16.5 percent year on year to 52.73 million tonnes in the first three months with net imports of oil products up 31.8 percent from a year ago.

The 'apparent consumption' represents the sum of net imports and output and could be taken as an index for the real oil consumption excluding inventory.

(Xinhua News Agency May 8, 2008)