Seeking development on divergent paths: Shandong’s local refining facilities keep pace with the times

Thread Content

Since its inception and development, Shandong’s local refining industry has grown over the past twenty-odd years; its industrial scale has gradually improved. It has moved forward step by step, with its direction of development and production processes undergoing numerous changes along the way, facing many challenges. Earlier, in 2004, local refineries that processed high-quality fuel oils such as M100 only needed to use atmospheric distillation and catalytic cracking units; by producing mainly 90# gasoline, it could be put on the market. The entire oil refining process features a short production chain and high profits, resulting in considerable earnings from refining; however, this good situation did not last long. After 2007, as other countries in Asia **increased the processing of M100 fuel oil, the prices of high-quality fuels such as M100 rose sharply. This reduced the profits of refineries, leaving local refining companies unable to afford to make purchases. Although other low-quality fuel oils are inexpensive, the local refining processes and procedures at that time were not capable of processing such low-quality fuel oils ； Furthermore, with the improvement in oil quality, the 90# gasoline and catalytic diesel produced by refineries’ catalytic cracking units can no longer meet market demands, necessitating adjustments to local refining processes. Following the discovery by Weifang Huahe of the economic viability of using delayed coking for processing heavy fuel oil, a large number of delayed coking units were put into operation in Shandong’s local refineries, and they remained the primary processing method there for a long time. Meanwhile, the widespread use of hydrogenation units further enhances the environmental friendliness and stability of gasoline and diesel. At this time, the main refining units in refineries include atmospheric and vacuum distillation, catalytic cracking, delayed coking, and hydrorefining, which are generally sufficient to meet the processing needs of various types of crude oils. The development of domestic refineries is always accompanied by technological progress. As the standard for the quality of refined oil products in China continues to improve, facilities such as reforming, alkylation, hydroprocessing, and hydrocracking have been introduced in these refineries, effectively eliminating the obstacles to producing refined oil products that meet National IV and National V standards. As the right to import crude oil has been delegated to local refineries, these refineries are no longer limited to using fuel oil as raw material; without the concern of consumption tax deductions, they seek diversified development. Some refineries have expanded into the chemical industry, and the concept of \"using oil as a starting point and chemicals as an end product\" is gaining popularity. Previously, refineries processed fuel oil to produce chemical products, but the inability to offset consumption tax made such operations unprofitable and deterred refineries from doing so; now, however, it has become profitable for local refineries to process crude oil to produce chemical products. Relevant experts believe that the catalytic heavy chemical industry route developed by local refineries holds great potential in the future. Despite the continuous changes in the raw material market and the supply and demand dynamics of refined oil products, domestic refineries are always able to adapt quickly. Guided by relevant policies, they will continue to play a vital role in China’s oil product market.