Total interested in new China refining projects

* Total in open talks with Chinese trader Sonochem
* Also thinking of talks with Sinopec, Kuwait

ROTTERDAM, May 18 (Reuters) - French oil major Total (TOTF.PA) is considering taking part in new refining projects in China and is in open talks with Chinese state oil trader Sinochem, a senior executive said on Tuesday.

Jean Jacques Mosconi, senior vice president for strategy at Total, said China was an attractive market due to the speed of its economic recovery and the company, which already has a stake in a Chinese Dalian refinery, was looking at new opportunities.

"We are contemplating other projects with Chinese partners and a Middle-Eastern supplier," Mosconi said at the Global Refining Summit in Rotterdam.

Mosconi later clarified that Total's Middle-Eastern partner was Kuwait and that the company was in open talks with Sinochem and was thinking about talks with Asian refiner Sinopec Corp. (0386.HK).

Industry officials told Reuters last year that Sinochem was quietly building its first wholly-owned major refinery in southern China, and was eyeing strategic partnerships with Kuwait's state oil firm and Total. [ID:nLD542271]

Mosconi said the firm was working towards reducing its global refining capacity by 500,000 barrels of oil per day by 2011 compared to 2007.

He said refiners based in Europe faced a challenge in the years ahead as U.S. gasoline import needs decline. He expected diesel-focused refineries to fare better in coming years.

"The outlook is good for diesel oriented refineries in some years, the market will have been cleared and they will benefit from less distillation capacity in Europe, so more tension in diesel," Mosconi said.

Mosconi expected refining margins to remain moderate until about 2015 when more capacity had been closed down in Europe and the U.S. East Coast.

"Our view is until 2015 you will have a moderate level of margins and then things will improve after 2015 because there will have been a big clean up of the market."

Other executives at the summit also expected some challenges ahead for the refining industry.

"We must prepare for a long period of low margins and high volatility of crude oil prices," said Dariusz Jacek Krawiec, president and CEO of Poland's top refiner PKN Orlen PKNA.WA.

He expected global average utilisation rates to decrease further in coming years, and reach around 70 percent in 2015, with new capacity planned in Asia and the Middle East set to add to global overcapacity. (Reporting by Catherine Hornby; editing by James Jukwey)

Reuters
http://in.reuters.com/article/oilRpt/idINLDE64H1WH20100518