The proposed project, to be based in the new Xuwei area near the coastal town of Lianyungang, is estimated to cost more than 100 billion yuan ($15.45 billion), the National Business Daily said in a report available on its web site.

Should the proposal go ahead, the project would boost China's refining capacity to a new high and increase crude oil imports from the world's largest energy consumer.

The paper said Sinopec planned to build the mega-complex in two phases, with the first having an annual refining capacity of 12 million tonnes as well as a production capacity of 1 million tonnes of p-xylene per year.

Sinopec could not immediately be reached for comment.

Sinopec and the local government have yet to reach an agreement on the stakes each would hold in the project, the paper said, adding that Sinopec intends to invite foreign companies to participate in the project.

Construction of the proposed project is due to start in 2013 and, with the plant operational by 2016, though approval is still pending from China's top economic planner National Development and Reform Commission.

Sinopec operates 13 of the country's 20 mega-refineries and has more than 10 million tonnes of capacity.

China's oil refineries processed 38.47 million tonnes of crude oil in May, up 6 percent from a year earlier.

China, the world's second largest economy, is undergoing a refinery construction boom to support its rapid economic expansion and fast-rising demand for fuel.

Industry officials have estimated that China would likely add about 3.7 million bpd of new refining capacity between 2010 and 2015, accounting for more than a third of China's current total refining capacity.

Copyright Reuters, 2011