Construction of an oil refinery with an annual crude oil processing capacity of 10 million tons was kicked off in Qingdao, a port city in East China's Shandong province on June 22.

The project is undertaken jointly by the Shanghai-listed Sinopec, Shandong Guotou and Qingdao Guoxin. 

A Sinopec official said the Qingdao oil refinery will have 13 sets of main production devices, capable of processing 10 million tons of crude oil a year during the first phase. It will start production in 2007.

After going into operation, the refinery will process 10 million tons of imported crude annually, able to produce 7.6 million tons of finished oil and one million tons of light oil annually. Its annual sales are expected to top 23 billion yuan.

At the inauguration ceremony of the refinery project, Sinopec also signed a contract with the Qingdao to jointly build an oil terminal with a capacity of 300,000 tons to support the project.

The two sides will each hold 50 per cent in the joint venture terminal.