China's province of Shandong - home to most of the country's independent refiners - plans to shut down as much as 500,000 bpd refining capacity at the so-called teapots as it pushes forward with a huge US$20-billion refinery and petrochemical complex in the province, industry officials told Reuters.
The province of Shandong has had plans since 2018 to shut down a total of 500,000 bpd of refining capacity at independence refiners. Now the plan for the new giant complex is likely speeding the decision to shut that capacity, which is equal to around a fifth of the province's refining capacity, according to Reuters sources.
Last week, China gave the go-ahead to plans for the huge $20-billion refinery and petrochemical complex in the Shandong province, Reuters reported, citing two industry sources familiar with the approval process.
The mega petrochemical complex has been years in the planning, but now it looks like the world's top oil importer is looking to spend money on oil infrastructure in order to reinvigorate the economy hit by the coronavirus.
China's National Development & Reform Commission (NDRC) approved the Shandong Yulong Petrochemical project, Reuters' sources said.
The complex in the Shandong province - where most of China's independent refiners, the so-called teapots, are based - is expected to host now the mega project which analysts expect to become operational at some point at the end of 2024. Shandong Yulong Petrochemical will have an oil refinery with a capacity to process 400,000 barrels per day (bpd) and an ethylene plant producing 3 million tons per year. According to Reuters' sources, the investment in the project will be some US$19.7 billion (140 billion Chinese yuan).
The teapots that could be closed are likely to include Binyang Ranhua, Zhonghai Jingxi Chemical, Yuhuang Chemical, and Jinshi Asphalt, analysts and an oil source in the Shandong province told Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More