Shandong reduces and integrates local refining capacity to support large petrochemical groups
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On October 30, the People’s Government of Shandong Province issued the \"Implementation Plan for Accelerating the High-Quality Development of the Seven High-Energy-Consuming Industries.\" This plan specifies the goals and timelines for the upgrading of local refineries in Shandong. The overall approach to the development of this industry in Shandong involves optimization and restructuring, reduction and integration, favoring larger facilities over smaller ones, and integrating refining with chemical production. Strive to consolidate and transfer the refining capacity of local refineries located in densely populated urban areas and those with a refining capacity of 3 million tons or less by 2022; by 2025, consolidate and transfer the refining capacity of local refineries with a capacity of 5 million tons or less in phases. The crude oil processing capacity of the local refining industry across the province will be reduced from the current 130 million tons per year to around 90 million tons per year, while the yield of refined products (gasoline, diesel, kerosene) will drop to about 40%. Within 3 to 5 years, in line with the capacity reduction targets set for transformation and upgrading, efforts will be made to optimize and integrate refineries located in areas with high population density and those with a refining capacity of 3 million tons or less, with the aim of developing integrated refining and chemical processing projects with a capacity of 30 million tons. At the same time, it supports leading enterprises to take the lead in planning and constructing another 30 million tons of integrated refining and chemical processing projects in line with international first-class standards; once these projects are completed and put into operation, the corresponding oil refining capacity will be shut down simultaneously. By 2025, in accordance with the capacity reduction targets set for transformation and upgrading, the optimization and integration of refineries with a refining capacity of 5 million tons or less will be essentially completed. Meanwhile, integrated refining and chemical projects with a capacity of 20 million tons, at an international leading level, will be planned and constructed to meet the needs of the high-end development of the province’s chemical industry. How should we view Shandong’s efforts to reduce the refining capacity of local refineries and to support large-scale petrochemical groups? What will refineries look like in the future after their numbers are reduced? How is the large-scale petrochemical industry distributed? In Dongying, Yantai, Weifang, Binzhou, Zibo, and other places? How can refineries participate in large-scale petrochemical operations, and how should smaller local refineries be phased out?
In 2005, Sinopec invested in building a large refinery with an annual capacity of 10 million tons in Qingdao, and Du Shicheng promised Chen Tonghai that small refineries with an annual capacity of 10 million tons would be shut down in Shandong Province. As a result, the large refineries were built, while the small refineries grew like sparks and became even more active. The two leaders went back inside the wall to have tea and chat amiably.
Refineries will have a tough time in the coming years
3 million tons? Yet another hurdle
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