China’s Shandong will go ahead with plans to shut down smaller, independent oil refineries with a combined capacity of 500,000 barrels per day (bbl/d) to make way for a giant complex that should aid economic recovery from the coronavirus crisis, according to Reuters.

Shandong will at first target closure of plants producing less than 60,000 bbl/d, especially those with financial losses, out of about a dozen that have shown interest in compensation. The government had proposed last year a fee of $113 for each tonne of capacity, taking the total expense to $2.82 billion for closing 500,000 bbl/d.

The first closures would include Binyang Ranhua, Zhonghai Jingxi Chemical, Yuhuang Chemical and Jinshi Asphalt, with combined crude distillation capacity of just over 200,000 bbl/d.

China recently granted approval for the building of the $20 billion Yulong Petrochemical complex. As a result, this has sped up plans that date back to 2018 to close 500,000 bbl/d of smaller refineries, which represents 20% of Shandong’s capacity and makes up over 60 small plants. The decision to approve the mega complex has been taken in the backdrop of expected strong production demand.