China to Shut Down Smaller Refineries, Build Giant Complex  

China to Shut Down Smaller Refineries, Build Giant Complex  

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.

 

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