BEIJING - CHINA said on Wednesday it had approved initial work on a multi-billion-dollar oil refinery project in the south, in what the local press has hailed as the nation's largest ever joint venture.

The official China Daily said on Wednesday the project, to be jointly run by the nation's top refiner Sinopec and Kuwait Petroleum Corp, would involve an investment of five billion US dollars (S$7.23 billion).

'Initial work can be started on the project now,' an official surnamed Zhang with the National Development and Reform Commission, China's top planning agency, told reporters.

It will include a refinery and an ethylene plant to be located in Nansha city, Guangdong province, putting it in a position to help quench the severe energy shortage experienced by one of China's top industrial powerhouses.

The province has contributed nearly 10 per cent of the country's economic growth in recent years but has been experiencing tight supplies of fuel for years, the report said.

An executive surnamed Wu with Sinopec said the facilities were expected to come online in 2010 at the earliest and would be capable of processing 15 million tonnes of crude and producing one million tonnes of ethylene a year.

Chinese demand for ethylene - a key component in the manufacturing of plastics products - has risen dramatically amid an economic boom.

The country had to import 57 per cent of its ethylene needs in 2005, up from just 22 percent in 1990. -- AFP