China Petroleum and Chemical Corp, the world's largest refiner by volume, which is known as Sinopec Group, started construction work on the country's first million-ton-level carbon capture, utilization and storage, or CCUS, project in East China's Shandong province on Monday.

The project is being executed by two of Sinopec's subsidiaries－Qilu Petrochemical Co and Shengli Oilfield Co. Operations will start by the end of this year.

The CCUS project will capture 10.68 million metric tons of carbon dioxide from Sinopec's Qilu refinery, and will enhance oil recovery during the next 15 years, and also help enhance oil production by around 2.97 million tons, Sinopec said.

It is expected to become the country's largest CCUS whole industry chain demonstration base. Besides, the project will help China to honor its pledge to peak carbon emissions by 2030 and achieve carbon neutrality by 2060.

The project will also lay a solid foundation for Sinopec to implement its larger-scale CCUS projects, said Zhang Yuzhuo, the group chairman.

The CCUS project will also take advantage of Sinopec's upstream and downstream integration advantages by injecting its subsidiary refiners' captured carbon dioxide into the oilfield formation to explore and exploit the hard-to-get crude, it said.

According to the International Energy Agency, CCUS projects will result in a 14 percent reduction in carbon emissions by 2050 and will likely have broad market prospects.

Sinopec said it would step up construction of other CCUS projects during the 14th Five-Year Plan period (2021-25) to push forward the company's low-carbon energy transition while ensuring national energy security.

An analyst said the country's major oil companies have been accelerating strategic repositioning toward low-carbon technologies, following China's carbon reductions pledge.

Based on the plans announced by the country's oil majors so far, they will focus, at least in the near term, on decarbonizing fossil-based projects, and will seek a balance between energy security and climate goals, said Tang Sisi, an analyst at BloombergNEF.

China National Petroleum Corp, the country's largest oil and gas producer, also said earlier it will continuously push forward CCUS projects as an important option for reducing CO2 emissions in the energy sector.

The company has captured 2 million tons of carbon dioxide since the pilot project was put into operation in its Jilin oilfield in 2008, it said.