July 28, 2025 [Oil Price]- PetroChina has quietly approved a multi-billion-dollar refinery and petrochemical complex in northeast China’s Dalian, marking a strategic shift amid declining fuel demand and growing petrochemical appetite.

The final investment decision has been made, according to multiple sources, but it has not yet been formally announced. The new facility, to be built on Changxing Island, will feature a 200,000 bpd crude refinery and a 1.4 million ton-per-year ethylene unit, alongside polyethylene, polypropylene, and polyolefin elastomer production. Total project cost is expected to be 68.5 billion yuan ($9.56 billion).

This new build replaces PetroChina’s massive 410,000 bpd refinery in downtown Dalian, which has been shutting down in stages since late 2023. The last crude unit went offline June 30, bringing to a close one of China’s largest refining operations. The closure was driven by a mix of safety concerns, municipal pressure to relocate, and long-term overcapacity in a market where fuel demand has peaked.

CNPC and IEA analysts predict that China’s consumption of gasoline and diesel has likely hit a ceiling, thanks to EV adoption and a pivot away from manufacturing-heavy growth. But demand for plastics and other petrochemicals is still rising—especially in the face of China’s industrial and export ambitions.

Despite lower oil prices and weakening refined product margins, PetroChina is bucking the bearish trend. The company posted a 2.3% profit bump in Q1, thanks largely to rising natural gas sales and government support for shale development. While rivals Sinopec and CNOOC posted double-digit profit declines, PetroChina is leveraging its upstream gas strength and pivoting its refining business toward higher-value chemicals.

The Dalian revamp is a case study in that pivot—downsize, relocate, and refocus. The old model of brute-force fuel production is giving way to a more refined game: chemicals, plastics, and cleaner margins.