China Mega Oil Refining Project Feature Analysis
The development of China’s mega oil refining projects has four features.
First, the mega oil refining projects are concentrated in petrochemical parks. According to the Petrochemical Industry Layout Plan, China attaches vital importance to the construction of the seven major petrochemical bases, including Changxing Island, Caofeidian (Hebei), Lianyungang (Jiangsu), Caojing (Shanghai), Ningbo (Zhejiang), Huizhou (Guangdong) and Gulei (Fujian). Currently, China’s refining industry is actively promoting the development of refining and chemical integration projects and improving the development of high-efficiency, high-end fine chemicals and new chemical materials to achieve a green and efficient petrochemical industry. It is a global trend for mega oil refining projects to concentrate in petrochemical parks.
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Second, the newly added refining and chemical integration projects are all large scale and centralized. There are a series of world-class refining and chemical bases around the world, including Gulf of Mexico (the U.S.), Tokyo Bay (Japan), Jurong Island (Singapore), Jubail and Yanbu Petrochemical Industrial Park (Saudi Arabia), Rotterdam (Netherland) and Ulsan (South Korea).
Currently, in China, there are many centralized refining and chemical regions, including Bohai Bay, Hangzhou Bay (Yangtze River Delta) and Daya Bay (Pearl River Delta). By scientific and rational planning and optimizing and adjusting the layout, China is solving the dilemma of industrial development from the source, improving the quality of development, promoting the improvement of people's livelihood and promoting the green, safe and efficient development of the petrochemical industry. According to China’s National Development and Reform Commission, China will implement the petrochemical industry planning and layout plan, unify the project approval standard and set the relevant indicators requirements for new projects. The requirements include that the capacity of one single CDU must be over 15 million mt/a, the capacity of ethylene units must be over 1 million mt/a, etc. By promoting the transformation and upgrading of the petrochemical industry and the development of related industries, China’s economic growth will also be stabilized and stimulated.
Mega refining and chemical integration projects are gradually adopting a sharing mode in materials, energies and utilities to effectively reduce the production cost and boost the overall profits. In the future, China will have seven world-class petrochemical bases in Changxing Island, Caofeidian (Hebei), Lianyungang (Jiangsu), Caojing (Shanghai), Ningbo (Zhejiang), Huizhou (Guangdong) and Gulei (Fujian).
Third, the development routes of the mega refining and chemical integration projects resemble each other. Currently, most of the newly added mega refining and chemical integration projects in China significantly reduce their yield rates of refined oil and dramatically raise their yield rates of chemical feedstock and fine chemical products. Moreover, the refining and chemical integration projects are likely to abandon the oil refining units and build ethylene crackers as their upstream units. For example, BASF will build a 1 million mt/a ethylene cracker in Huizhou as the upstream unit and build multiple downstream units later; ExxonMobil is using crude oil to produce olefin through cracking. Moreover, ExxonMobil’s chemical project in Huizhou includes a 1.2 million mt/a ethylene cracker, two high performance polyethylene production lines and two polypropylene production lines. In the future, the mega refining and chemical integration projects will focus on chemical parts, and the competition will intensify.
Currently, the newly added mega refining and chemical integration projects in China are building large-scale oil refining, olefin and aromatic units. With the declining of oil refining capacity and the rising of chemical production capacity, the competition among the downstream chemical products will be increasingly fierce.
Fourth, mega refining and chemical integration projects focus on reducing the production cost. Currently, one of the vital shortcomings of China’s mega refining and chemical integration projects is that the downstream chemical products at these projects are mostly low-end, while high-end chemical products greatly rely on imports. Therefore, it is important for China to concentrate on developing high-end chemical products with high quality. With the rapid development of private refining and chemical integration projects, the low-end chemical products will soon suffer oversupply. In order to provide stable feedstock supply, support the development of high-end fine chemicals and chemical new materials and finally increase competitiveness, it is a global trend for refining and chemical integration projects to reduce production cost, and they enjoy advantages in doing that.
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