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Innovative breakthroughs: integration of refining and catalytic processes to reduce oil consumption while increasing product quality. After the Spring Festival, the 300,000 tons per year crude oil catalytic cracking for olefin production (UPC) technology pilot project at Shandong Dongming Petrochemical Group resumed operations at full speed, with plans to have it operational by the end of the year. This major project, which has attracted considerable attention since its inception, is pushing a technology for converting crude oil into olefins in just one step – a process once considered \"impossible\" by the industry – to the threshold of industrialization. Against the backdrop of energy transition, the \"dual carbon\" goals, and the demands for high-quality development, local refining enterprises in Shandong, represented by Dongming Petrochemical, are leveraging a series of major projects to pursue transformation toward \"integration of refining and chemical processing, higher-end products, and green and low-carbon operations\", thereby accelerating the shift of the industry from relying on scale advantages to focusing on quality advantages. In recent years, the combined pressures from both domestic and international sources have pushed Shandong’s local refining enterprises to a critical historical juncture where failure to transform means elimination. “The key to breaking through lies in disruptive innovation in core technologies. ”Ding Shubing, president of the Shandong High-End Chemical Research Institute and vice president of Dongming Petrochemical Group, said that the total investment in Dongming Petrochemical’s UPC project is 11.07 billion yuan. It is the world’s first industrial demonstration project using UPC technology, establishing a new approach for converting crude oil into olefins characterized by a short process flow, high efficiency, low emissions, and high yield, thereby offering a new solution for upgrading industrial processes. Once the project is put into operation, it will enable the creation of a high-value industrial ecosystem that covers the entire chain, from a single drop of oil to high-end materials. Industry experts believe that currently, the major refineries in Shandong focus on high-value-added products as well as differentiated production approaches. Following a development strategy of \"converting oil into other products\" and \"transforming oil into specialty products\", they strive to increase the production of high-value-added products and to enable flexible conversion of chemical light oils. This allows for real-time dynamic adjustment and optimization of raw material allocation as well as product structure in response to market demands, thereby achieving increased economic benefits as well as reduced environmental impact through greener and lower-carbon practices. Among these, the main path for transformation is to reduce oil usage and increase the production of chemical products; in other words, the proportion of refined oil is reduced while the yield of chemical products is increased to over 30%. Basic chemical raw materials such as ethylene and propylene are developed, thereby enabling the creation of high-value-added products downstream. In this direction, several local refining enterprises in Shandong have embarked on a path of differentiated transformation. In Heze, Dongming Petrochemical has established an integrated refining and chemical processing project with a total investment of 73.8 billion yuan. The project includes facilities for producing 15 million tons of oil per year, 1.6 million tons of ethylene, and 2.2 million tons of aromatic xylene, along with related downstream processing units. Through the coordination of 36 different processing units, the proportion of chemical products in the output is set to increase from 45% to over 60%. At Dongying Port, the Fuhai (Dongying) Petrochemical Aromatic Raw Materials Low-Carbon Reconstruction and Comprehensive Utilization Demonstration Project, with a total investment of 31.8 billion yuan, plans to build 22 processing units, including one with an annual production capacity of 15 million tons for atmospheric and vacuum distillation, and another with a capacity of 2.2 million tons for continuous reforming; these units will enable the production of more than 10 types of high-value chemical products. In Zibo, the Xintai Petrochemical projects, which involve a total investment of 18.7 billion yuan, include an integrated project for the comprehensive utilization of alkanes as well as a project focused on green and low-carbon olefins. These projects entail the construction of 19 production units for chemical new materials and specialty chemicals; once all of them are in operation, they will enable the development of an industrial chain that connects crude oil to olefins and then to polyolefins. In Yantai, the Yulong Petrochemicals project, which involves investments of over 100 billion yuan, has expanded its operations to include the production of more than 50 high-value-added new materials such as POE elastomers and nylon 66. This expansion creates a closed-loop industrial chain that spans from crude oil to olefins, aromatics, and high-end new materials, thereby increasing the added value of chemical products by over 80%. The 2025 work report of the Shandong Provincial Government calls for efforts to get projects such as the integration of refining and chemical processing at Dongming Petrochemical, as well as the upstream and downstream facilities at Dongying Port, approved and implemented. At present, these projects are allocating various resources as planned and going through the approval procedures. For medium-sized refineries that do not have the capacity for large-scale investments, many of them have shifted their focus from producing conventional oils to manufacturing specialized products such as specialty oils, high-end solvents, and base oils for lubricants. For example, Jingbo Petrochemical focuses on high-end specialty oils and lubricants, Shandong Haike produces high-end solvents and fiber raw materials, while Qicheng Petrochemical concentrates on the comprehensive utilization of C4 compounds to produce clean fuel additives. Among the companies that are reducing their capacity in the domestic refining sector, some change course by stopping production and shifting to other activities, while others enter new business areas. Hengyuan Petrochemical has shut down its traditional refining facilities and, building on its existing carbon resources, shifted to producing high-value carbon materials such as acicular coke. These products are used in lithium battery anodes and ultra-high power electrodes, marking a remarkable transformation from refining crude oil to manufacturing advanced materials.