The designed refining capacity of Sinopec Shanghai Petrochemical Co Ltd will rise to an annual 16 million metric tons.

That's after the company finishes updating refining equipment as early as the fourth quarter of this year, said chairman Rong Guangdao on Tuesday.

At present, SPC, one of China's biggest integrated petrochemical companies, has an annual processing capacity of about 12 million metric tons of crude oil.

The upgrading is aimed at meeting the growing demand for petroleum products in eastern China, said Rong on the sidelines of the ongoing National People's Congress.

The company, which is listed in Shanghai, Hong Kong and New York, will also boost its annual ethylene capacity to as much as 1.5 million metric tons, up from the current 845,000 tons, by replacing obsolete equipment with processing capacity of 145,000 tons by a more advanced equipment with capacity of as much as 800,000 metric tons.

The project has been approved by the central government and is awaiting the final nod from China Petroleum & Chemical Corporation, which holds a 56 percent stake in SPC, Rong said, adding that he expected the project to begin construction this year and to be operational as early as 2014.

In a preliminary report to the Shanghai Stock Exchange, SPC said that its 2011 net profit is expected to drop by between 50 and 70 percent from the previous year. That's because of losses in the refining sector as the cost of its imports of crude oil surpassed retail fuel prices under the nation's current fuel-pricing scheme.

"We hope that the authorities will adhere to the fuel-pricing mechanism and make the decision-making procedure more transparent to give us more leeway to respond," Rong said.

In addition, he said that this year the company will start commercial production of carbon fiber, as material widely used in the aerospace and military sectors, and will have annual production of 15,000 metric tons.