On the other hand, the purchase could well enable the Shandong-based refiner - which has been able to run a refinery at a lower cost - to deal with its overcapacity while making its first move with an overseas acquisition, accelerating its global moves to cash in on business opportunities arising from low crude prices, she said.

China's private refiners need to be more internationalized if they want to grow stronger, the analyst added.

Wang Youde, chairman of Hengyuan, said: "Many Chinese private refiners are eager to gain overseas resources, but they are not confident due to limited resources at home and abroad and difficulty in getting financing from banks."

"However, compared with the State-owned enterprises, we are more flexible in our market and efficient in decision-making."

According to Wang, the acquisition enables Hengyuan to have an overseas sales platform as Shell Refining sees 90 percent of its oil products consumed within Malaysia.

"For Malaysia, which sees supply of refined oil products falling short of demand, Hengyuan could import its petroleum products in the future once it got the refined oil export qualifications," he said.

Contact the writers through zhengxin@chinadaily.com.cn

(China Daily 12/28/2016 page13)