REFINERY NEWS ROUNDUP: China's Sinopec expects lower 2020 throughput

London — Sinopec, the world's biggest refiner by capacity, expects its 2020 throughput to fall from last year due to weak demand due to the coronavirus pandemic, in what would be the first year-on-year decline in its crude processing volume since 2016, a company executive said.

This possible decline could lead to a reduction in the company's imports of feedstock crude, with over 80% of this imported.

"Sinopec's refining utilization for the whole year will be affected year on year by [the drop in domestic consumption in] the first quarter and [limited overseas outlets for] product exports in Q2" due to the pandemic, Sinopec's senior vice president Ling Yiqun said.

The company expects domestic oil product consumption to shrink in 2020, despite demand more or less recovering in the second half, Ling said.

China's oil product demand had been growing for decades, although the pace of annual growth slowed to 1.4% last year, government data showed.

"The impact from the coronavirus outbreak in China is relatively huge," Ling said. "Our utilization rate fell to 66% in February from a normal level in January, a significant decline."

S&P Global Platts survey showed that Sinopec's operating rate in February dropped to a historical low of 64%, from 89% in January, and recovered to 72% in March. Ling said the company's refinery utilization rate in 2019 was 91.3%.

Elsewhere, the coronavirus pandemic and the government's call for the public to voluntarily restrain from leisure activities slashed Japan's domestic gasoline demand in March to the lowest for the month since 1990.

Japan's gasoline demand is estimated at 3.77 million kl, or 764,921 b/d, in March, down 8% from a year ago, the country's largest refiner JXTG Nippon Oil & Energy said. JXTG attributed the drop in gasoline demand to a sharp decline in leisure activities as a result of the spread of coronavirus, in addition to the prevailing downtrend in demand for the motor fuel in Japan.

March gasoline demand would be the lowest since domestic sales of 3.69 million kl were recorded in 1990, according to data from the Ministry of Economy, Trade and Industry.

In Japan, refiners are considering cutting operating rates further in April, even though the March run rate had already declined to a low typical just prior to the start of maintenance season, as global demand for refined products plummeted as coronavirus spread around the globe. At least two Japanese refiners are looking at the potential need for run cuts in April amid a drop in domestic demand for key oil products such as gasoline and gasoil, coupled with the country's relatively light spring refinery maintenance season this year, according to sources with these refiners.

In March, Japan's gasoil demand is also estimated to have fallen 2% year on year to 2.92 million kl as a result of slowing cargo movements amid bearish economic activity, according to JXTG Nippon Oil & Energy.

Near term

New and revised entries

Japan

--Japan's largest refiner JXTG Nippon Oil & Energy said it will shut in late April the No. 2 170,000 b/d crude distillation unit at its 235,000 b/d Kawasaki refinery in Tokyo Bay for scheduled turnaround until early July. JXTG Nippon Oil & Energy also shut in mid March its 65,000 b/d No. 3 crude distillation unit at Kawasaki for scheduled maintenance until late June.

--Japanese refiner Idemitsu Kosan said that it remains unclear when it can restart its fire-hit 70,000 b/d Keihin refinery in Tokyo Bay. Idemitsu Kosan, Japan's second largest refiner, said on February 7 that it had expected its Keihin refinery to remain shut at least until the end of March, having been shut since late December 2019 due to a fire. The fire started on December 24, 2019, near the 27,000 b/d coker at the refinery, which is operated by Toa Oil, part of the Idemitsu Kosan group. The coker and other related units were immediately shut and subsequently all other units, including the sole crude distillation unit, were closed over December 25-27.

Existing entries

China

--Sinopec Tianjin Petrochemical will shut its 2.5 million mt/year CDU, and a 10 million mt/year CDU for maintenance from late April or early May, to last until July.

--Sinopec Wuhan Petrochemical will shut its 3.5 million mt/year CDU, and a 5 million mt/year CDU for maintenance from late April to July.

--PetroChina's Fushun Petrochemical will shut for maintenance from June 1 to July 10.

--PetroChina's Jinxi Petrochemical will shut for a full turnaround from June 25 to August 27.

--At China's Hengli Petrochemical (Dalian) one reformer was idled for maintenance and there is no date to resume production, a source said. The refinery has three reformers, with capacity of 3.2 million mt/year each.

--Sinopec's Jinling Petrochemical has shut in February its 1.5 million mt/year FCC, and a 600,000 mt/year gasoline hydrotreater for three months due to slow gasoline sales.

--China's Sinopec Anqing refinery in central Anhui province plans to restart three idled refining units in end March or early April, depending on the recovery of oil demand in the local market, a refinery source said. The refinery had shut three units -- a 4 million mt/year crude distillation unit, a 1.4 million mt/year fluid catalytic cracking unit and a 1 million mt/year delayed coker -- gradually in the first half of February due to manpower shortage and reduced demand after the coronavirus outbreak, S&P Global Platts reported earlier.

--PetroChina's Lanzhou Petrochemical Company in northwestern Gansu province has shut two more secondary units in March, due to the weak demand for oil products in the region, a refinery source told S&P Global Platts. The newly shut units are a 600,000 mt/year jet fuel hydrotreater, and a 60,000 mt/year MTBE unit. Prior to this, the refinery had shut a 1.2 million mt/year gasoil hydrogenation unit around February 4, due to weak gasoil sales. It is not clear when these units will resume operations, the source said. In addition, the refinery planned to process 730,000 mt of crudes in March, or 82% of its nameplate capacity, compared with 70% of its nameplate capacity in February.

--China's West Pacific Petrochemical Corp., or WEPEC, refinery in northeastern Liaoning province has shut its 2.2 million mt/year residual hydrogenation unit in early March for maintenance, a source said, adding the works will last for 21 days. The shutdown of the unit has kept the refinery's run rate at around 79%, mostly steady compared to February, when the refinery cut throughput due to weakening demand reflecting the impact of the coronavirus outbreak.

--PetroChina's 5 million mt/year Dagang Petrochemical will shut for maintenance from May 1 for a turnaround until July 1.

--State-owned PetroChina shut its Guangxi Petrochemical in southern Guangxi province on February 9 for scheduled 50-day maintenance , a refinery source told S&P Global Platts. The works should help the refinery to offset stock pressure after product demand slumped due to the coronavirus outbreak.

--Sinopec Shanghai Petrochemical will shut its 3.5 million mt/year CDU and 3.3 million mt/year gasoil hydrogenation unit for maintenance over March to early April.

--Sinopec Zhenhai Petrochemical shut its 8 million mt/year CDU and 1.8 million mt/year FCC over mid-March to early May for maintenance.

--Sinopec Beihai Refining and Petrochemical shut the entire refinery for works from mid-March until mid-May.

--PetroChina's Dalian Petrochemical in northeastern Liaoning province shut for an overall maintenance over March 25-May 25, for around two months.

--Sinopec's Yanshan Petrochemical shut its 3 million mt/year CDU and 2 million mt/year FCC for maintenance from late March to early May.

Japan

--The 90,000 b/d No.2 CDU at JXTG Nippon Oil & Energy's Mizushima B-plant in western Japan , remains closed after shutting February 4. JXTG declined to give a reason for either shutdown and a company spokeswoman said it remained unclear when No.2 will restart.

--Japan's largest refiner JXTG Nippon Oil & Energy has decided to terminate its refining operations at the 115,000 b/d Osaka refinery in western Japan and turn the facility into an asphalt-fueled power plant in October 2020, it said.

Upgrades

Existing entries

--Sinopec's 21 million mt/year Jinling Petrochemical refinery in eastern China will build a new 600,000 mt/year vacuum distillation unit, and reconfigure its No.3 gasoline hydrotreater to a 360,000 mt/year hydrotreater to produce RMG 380 CST bunker fuel oil with sulfur content no higher than 0.5%.

--Sinopec's 6 million mt/year Jingmen Petrochemical in central Hubei province planned to complete the construction of three units in 2019, including a 2.8 million mt/year heavy oil catalytic cracker, a 550,000 mt/year lubricant hydrogenation unit, and a 200,000 mt/year alkylation unit. The start-up of these units will help update the processing capacity at the refinery to around 8 million mt/year, from the current 6 million mt/year.

--Sinopec's Zhenhai refinery in Ningbo, eastern Zhejiang province, China, has issued four tenders for pre-construction works of its 1.2 million mt/year ethylene expansion project. The project also includes 15 million mt/year of refining capacity.

--Chinese independent refinery Haiyou Petrochemical has been building a new 1 million mt/year coker.

Launches

Existing entries

--China's Zhejiang Petrochemical Co., or ZPC, has successfully started up its 10 million mt/year No.1 crude distillation unit and most of its refining units, a key step to fully commission its 400,000 b/d integrated refining and petrochemical facilities. ZPC's No.2 CDU has been in commercial operation since late May. The company is gradually commissioning its secondary units connected to the CDU since then.

--Sinopec plans to start up its greenfield 10 million mt/year (200,000 b/d) Zhongke (Guangdong) refinery in Zhanjiang, southern Guangdong province in April 2020, a Sinopec refinery source said. Construction works at the Zhongke (Guangdong) refinery complex, which have begun since April 2018, are scheduled to be completed be December 2019, Platts reported earlier. The Zhongke refinery complex involves building a 10 million mt/year crude distillation unit, 4.2 million mt/year fluid catalytic cracking unit, 4.4 million mt/year residual oil hydrotreater, 2 million mt/year hydrocracker, 2 million mt/year gasoil hydrotreater, 1.8 million mt/year continuous reforming unit, 2 million mt/year light-hydrocarbon reclaiming unit and associated facilities. Besides, it also includes building an 800,000 mt/year ethylene steam cracking unit, 400,000 mt/year pyrolysis gasoline hydrogenation, 550,000 mt/year polypropylene, 350,000 mt/year high density polyethylene, 250,000 mt/year EO, 400,000 mt/year EG, 100,000 mt/year EVA, 180,000 cu m/hour coal-to-hydrogen units, a power station and other utilities and facilities.

--China's independent Shenghong Group has opened a trading office in Singapore ahead of the start-up in the second half of 2021 of its 320,000 b/d refinery in Jiangsu province. Shenghong's refinery will only have one crude distillation unit with a processing capacity of 16 million mt/year, which will become the single largest distillation unit in China.

--Saudi Aramco is boosting its downstream investments in China, creating a joint venture to build a $10 billion refinery and acquiring a stake in the greenfield Zhejiang Petrochemical refinery and petrochemical complex.

--PetroChina officially started construction work at its greenfield 20 million mt/year Guangdong petrochemical refinery in the southern Guangdong province on December 5, 2018. Trial operations at the refining complex are expected to start in October 2021.

--China's coal chemical producer Xuyang Group has announced plans to build a greenfield 15 million mt/year refining and petrochemical complex in Tangshang in central Hebei province.