China Mega Refining & Chemical Complexes Reshaping Refined Oil Flows
With opening-up and marketization reforms in China’s macro economy and oil refining industry, China’s crude oil refining capacity increased rapidly in the past two decades, and a large number of refineries were built especially from the foundation of Sinopec and PetroChina. But after many years’ extensive development, China’s oil refining industry is facing severe overcapacity, and many small and out-of-date refineries cause high energy consumption, heavy environmental pollution and limit the modernization of the oil refining industry. Therefore, China’s governments authorized the proposal of construction of seven large petrochemical bases in 2014.
Some mega refining and chemical complexes are designed at the petrochemical bases, and all of the seven petrochemical bases are in coastal regions. Hengli Petrochemical has been put into production since 2019. In June 2020, Sinopec Zhongke (Guangdong) Refinery with CDUs’ capacity of 10 million mt/a was put into operation. And the second phase of Zhejiang Petroleum and Chemical with CDUs’ capacity of 20 million mt/a is predicted to be put into production at the end of 2020. Meanwhile, some other mega refining and chemical complexes are expected to be built in China’s 14th Five-Year Plan period.
The start-ups of those mega plants are certainly changing the flow of refined products. With diversification of sources of investment in China’s crude oil refining industry, Chinese refineries are facing fierce competitions in the marketing of refined products. In particular, the traditional independent refineries in Shandong Province, formerly known as teapot refineries, which were mainly built in 1960s, are striving for market shares.
