China's Newest Refiner Yulong Starts Up Crude Unit, Sources Say
09.23.2024 By Tank Terminals - NEWS

September 23, 2024 [Reuters]- China’s Shandong Yulong Petrochemical on Friday began starting up one of two new 200,000 barrel per day (bpd) crude units in eastern China, sources said, marking the refinery’s official launch after four years of construction.

 

The 400,000-bpd refinery is the only major refinery to come onstream this year in China and also one of the last greenfield plants being built as Beijing broadly caps crude oil refining capacity amid peaking Chinese fuel demand.

Situated on a man-made island in Longkou county of the city of Yantai, Shandong province, Yulong is expected to keep the crude units running through at least the end of this year, said one Shandong-based refinery source briefed on the matter.

The launch, in line with an earlier Reuters report, came as Chinese refinery crude throughput in August fell year on year for the fifth month to levels near two-year lows as demand for diesel declines and gasoline consumption is eroded by a switch to electric vehicles.

“Yulong started up the refinery at the request of the provincial government, although the company itself was concerned with very weak margins in the current market environment,” the source said.

A second source familiar with Yulong’s operation said the refiner was expected to start up secondary units in the coming days including a reforming unit with a processing capacity of 2.6 million tons per year (tpy) that produces petrochemical feedstocks.

Yulong Petrochemical did not immediately respond to a request for comment.

It may take several months for the refiner to ramp up output to commercial operation levels, sources said, but the timing of the start-up amid weak processing margins means Yulong may lean on cheaper crude oil supplies such as Russian ESPO blend to manage costs.

However, Saudi Arabia could become a potential source of crude oil supply, as state-run Aramco agreed last October under a preliminary deal to acquire a 10% stake in Yulong in exchange for a crude supply deal.

This is one of a string of similar strategic deals the top OPEC producer is lining up with privately controlled Chinese refineries.

The $20 billion Yulong project, comprising a 400,000-bpd crude refinery, a 3 million tpy ethylene complex and a 3 million tpy paraxylene facility, will help upgrade the fragmented refining sector in Shandong, home to scores of smaller independent refiners, known as teapots.

The project is 51% owned by private aluminium smelter Nanshan Group, 46.1% by provincial government-backed Shandong Energy Group and the remainder by two local firms.

 

Free Trial: Access 13,300 Tank Terminal and Production Facilities

13,300 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data

India's First Methanol Plant to be Set up in Telangana
11.21.2024 - NEWS
November 21, 2024 [Chem Analyst]- In a groundbreaking initiative, India is set to get its first m... Read More
Egypt in Talks with Foreign Companies Over Long-Term LNG Purchases, Sources Say
11.21.2024 - NEWS
November 21, 2024 [Reuters]- Egypt is in talks with U.S. and other foreign companies to purchase ... Read More
INEOS and GNFC Sign a Memorandum of Understanding to Build a New World Scale Acetic Acid Unit in India
11.21.2024 - NEWS
November 21, 2024 [INEOS]- INEOS Acetyls and Gujarat Narmada Valley Fertilizers & Chemicals L... Read More
Peru's State Oil Firm Could Open to Private Investors in 2025, Chairman says
11.21.2024 - NEWS
November 21, 2024 [Reuters]- Peru’s indebted state-run oil firm could consider offering a ... Read More