REFINERY NEWS ROUNDUP: China's plants cut runs; demand in Japan set to rise

The average utilization rate of China's four state-owned refiners fell from 84% in August to 82% in September, while independent refiners also cut run rates by two percentage points.

As a result, the country's crude throughput is likely to fall further from the 15-month low of 58.35 million mt in August, data from the National Bureau of Statistics showed.

Sinopec's average run rate fell to 84% in September from 88% in August due to the company's throughput control in addition to the scheduled maintenance at Sinopec's Shijiazhuang Petrochemical and Qilu Petrochemical.

In September, Sinopec has required its refineries to cut throughputs, following the "duo cuts" on energy consumption and carbon emission in some provinces, such eastern China Jiangsu province.

Sinopec's Jinling Petrochemical in the province lowered its run rates by about three percentage points from August.

Meanwhile, Sinochem's Quanzhou refinery also trimmed its crude throughput slightly in September, due to the replacement of the catalysts at its residual cracking unit. The refinery will also shut for an overall turnaround in November.

PetroChina cut throughput by one percentage point to 75% from August due to limited oil product outlets.

Dalian Wepec experienced a severe cut of eight percentage points compared with the previous month, to process just 635,000 mt of crudes in September, compared with 720,000 mt last month.

In the independent sector, refineries have also cut their run rates by at least two percentage points.

The Hengli Petrochemical (Dalian) in northeastern China lowered its run rates further to around 91% in September, from 100% in August, and 105% in July. This is the lowest level since Platts started tracking its run rates in May 2020. The refinery has shut a 2.25 million mt/year aromatics unit for maintenance following the maintenance at its residual hydrocracking unit, which has capped its daily crude throughputs.

On the other hand, the run rate at Zhejiang Petroleum & Chemical's two 10 million mt/year crude distillation units has been around 90% in late September, compared with 100% in August. The refiner has restarted its third CDU in Phase 2 project in early September but shut down again around mid September due to the cuts in energy consumption in the local region.

The small-sized independent refineries in eastern Shandong province also cut run rates to 64.8% as of Sept. 22, from the monthly average of 66.8% in August and 68% in July, according to local information provider JLC.

Throughputs at China's independent refineries in eastern Shandong province also continued to fall in August due to maintenance works and cuts earlier in the month amid weak margins. The combined throughput comprising crude, bitumen blend and fuel oil fell to a 17-month low of 9.45 million mt in August, according to local energy information provider JLC9.

Separately, Sinopec Shanghai Petrochemical, one of China's key oil product export refineries, is set to run at close to full capacity over July-December, company Chairman Wu Haijun said, despite an export quota shortage and lackluster domestic demand.

China's West Pacific Petrochemical Co. Ltd. refinery in the Northeast Liaoning province, plans to export 140,000 mt of oil products in October, according to a source with knowledge of the matter. That would be 31.7% lower from the planned September exports of 205,000 mt, which are expected to rise 10.2% from 186,000 mt in August, when new quotas were allocated to PetroChina, the parent company of Dalian Wepec, the source said.

China's Norinco Huajin will load a 40,000 mt gasoil cargo for export in late September, according to a source with knowledge of the matter.

This will be the first cargo for export since the refinery was allocated a second 150,000 mt batch of export quotas in August, taking its total quota allocation for the year to 300,000 mt and enabling it to resume exporting.

Sinopec's Hainan Petrochemical refinery in southern China is expected to export about 90,000 mt of refined oil products in September, down 18% from 110,000 mt planned for August, according to a refinery source. The refinery's planned exports in September will comprise about 20,000 mt of gasoline, 30,000 mt of jet fuel and 40,000 mt of gasoil, the source said.

PetroChina's flagship refinery Dalian Petrochemical in northeastern Liaoning province will raise its product exports to the usual level of 414,000 mt in September, according to sources with knowledge of the matter. The refinery skipped oil product exports in July due to quota shortages, while its outflow remained minuscule in August despite PetroChina obtaining new export quotas at 2.82 million mt early last month.

In other news, Sinopec aims to pursue its refining expansion plans as well as find ways to make the business more competitive through valued-added product diversification and by phasing out of aging units, while adopting processes that can contribute toward a lower carbon footprint, Chairman Ma Yongsheng said Aug. 30. The world's top refinery by capacity will be looking to diversify into some petrochemical products to cushion against an anticipated slowdown in demand for oil products, while it aims to keep investing in upstream projects in line with Beijing's goal for future energy security.

"The company will focus on maintaining the overall refining capacity and be more competitive," Ma said during the interim result call. "The company considers restrictions and conditions needed for meeting the carbon peak and neutrality targets when planning key refining capacity construction."

Sinopec aims to be carbon neutral by 2050, 10 years ahead of the country's overall target of 2060.

Sinopec plans to make hydrogen the cornerstone of its energy transition strategy with an investment of Yuan 30 billion ($4.64 billion) for developing the fuel through 2021-2025, Ma Yongsheng also said Aug. 30.

"[Sinopec] is targeting to become China's top hydrogen company, making [the fuel] a new driver of growth for the company while also developing solar, wind and biomass power," Ma said while discussing the company's interim results, adding Sinopec aims to integrate clean energy development with conventional energy to achieve its net-zero goal.

The company's investment in hydrogen would help it cut CO2 emissions by more than 10 million mt/year by the end of China's 14th Five Year Plan in 2025, according to Ma.

These efforts include constructing 1,000 hydrogen refilling stations with an overall service capacity of 200,000 mt/year by end-2025, Ma said.

A part of the investment will go into the refining business for green hydrogen production from renewables, and its utilization in the refining process, as well as hydrogen purification facilities.

Sinopec is targeting to cumulatively produce 1 million mt/year of green hydrogen in 2021-2025, Ma said.

In the first half of 2021, Sinopec completed construction of four hydrogen purification units at refineries in Yanshan, Guangzhou, Gaoqiao and Hainan. The purification unit at Yanshan Petrochemical can produce 99.999% pure hydrogen, which will be used for transportation in the 2022 Winter Olympics in Beijing, according to the company.

Sinopec's hydrogen production capacity from its refining processes was 3.5 million mt/year, accounting for 14% of China's hydrogen output, the company said earlier this year. Its primary refining capacity stood at 5.98 million b/d by end of 2020.

Meanwhile, Japan's Sept. 28 decision to lift all of the COVID-19 state of emergency and priority measures at the end of the month would support the country's ailing gasoline demand in October but market sources remained cautious about the speed of recovery.

Japanese refiners and traders surveyed by S&P Global Platts said Sept. 28 that the companies expect their October gasoline demand will recover from September but some remain cautious about whether the demand will mark a year-on-year increase in the next month.

Japan's refinery run rates fell to 72.7% over Sept. 19-25, from 74.1% between Sept. 12-18, as refiners cut their crude throughput by 2% week on week to 2.51 million b/d, data from the Petroleum Association of Japan showed Sept. 29.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

Near-term maintenance

New and revised entries

Japan

** Japan's has shut the sole 127,500 b/d crude distillation unit at its Wakayama refinery Sept. 21 until the end of November for scheduled maintenance.

** Japan's Idemitsu Kosan shut the sole 160,000 b/d crude distillation unit at its Aichi refinery in central Japan on Sept. 14 for planned maintenance. This is a large-scale turnaround carried out once every four years, and the suspension period ranges from two to three months.

** Japanese refiner Cosmo Oil restarted the sole 100,000 b/d crude distillation unit at the Sakai refinery in western Japan Sept. 21 after completing a scheduled turnaround.

** Japan's Cosmo Oil plans to shut the 75,000 b/d No. 1 crude distillation unit at its 177,000 b/d Chiba refinery in Tokyo Bay in early October until early November for scheduled maintenance. Cosmo Oil will also shut No. 1 residue desulfurization unit with 36,000 b/d capacity.

China

** Sinochem's Quanzhou refinery trimmed its crude throughput slightly in September, due to the replacement of the catalysts at its residual cracking unit. The refinery will shut for an overall turnaround in November.

** Sinopec's Shijiazhuang Petrochemical has been under maintenance since end-August, and will last till end-October.

** The Hengli Petrochemical (Dalian) in northeastern China lowered its run rates further to around 91% in September, from 100% in August, and 105% in July. This is the lowest level since Platts has tracked its run rates since May 2020. The refinery has shut a 2.25 million mt/year aromatics unit for maintenance following the maintenance at its residual hydrocracking unit, which has capped its daily crude throughputs.

** The run rate at Zhejiang Petroleum & Chemical's two 10 million mt/year crude distillation units has been around 90% in late September, compared with 100% in August. The refiner has restarted its third CDU in Phase 2 project in early September but shut down again around mid September due to the cuts in energy consumption in the local region.

** Sinopec's Qilu Petrochemical has restarted a 4 million mt/year CDU from maintenance at around Sept. 21, which started from Aug. 2.

** China's Norinco Huajin in northeastern Liaoning province restarted from scheduled maintenance at end August. The refinery was shut for month-long maintenance on July 15.

Existing entries

China

** Sinopec's Gaoqiao Petrochemical will shut the entire refinery for maintenance from Oct. 10 till early-December.

** Sinopec's Fujian Refining and Chemical Co. refinery in southeastern Fujian province will shut a 4 million mt/year CDU for maintenance from mid-October to mid-November.

** Sinopec's Guangzhou Petrochemical will shut a 8 million mt/year CDU for maintenance between mid-October and the end of November.

Japan

** Japan's ENEOS said it will decommission the 120,000 b/d No. 1 CDU at its 270,000 b/d Negishi refinery in Tokyo Bay in October 2022. It will also decommission secondary units attached to the No. 1 CDU, including a vacuum distillation unit and fluid catalytic cracker. ENEOS will also decommission a 270,000 mt/year lubricant output unit at the Negishi refinery.

Upgrades

New and revised entries

** Idemitsu Kosan, Japan's second-largest refiner, started Sept. 1 a 45,000 b/d residue fluid catalytic cracker at its 190,000 b/d Chiba refinery in Tokyo Bay after having converted from a fluid catalytic cracker with the same capacity, the company said, in a move that allows to increase its residue processing capacity to 50% from 35% at the modified unit. In May 2020, Idemitsu completed remodeling work to improve the efficiency of its 40,000 b/d residual hydro desulfurizing unit, reducing the production of high-sulfur fuel oil while increasing the production of low-sulfur fuel oil for the International Maritime Organization's global low sulfur mandate for marine fuels taking effect January 2020. The surplus low-sulfur fuel oil will be used as a raw material for RFCC. "The processing capacity of RFCC does not change, and the quantity of products produced does not change. By increasing the residue processing capacity from 35% to 50%, we can supply low-sulfur fuel oil as it is or produce gasoline from low-sulfur fuel oil [through RFCC]," a spokesperson said Sept. 1. Idemitsu was carrying out work to convert FCC to RFCC in parallel while maintaining the operation of FCC.

Existing entries

** PetroChina's Guangxi Petrochemical in southern Guangxi province plans to start construction at its upgrading projects at the end of 2021, with the works set to take 36 months. The projects include upgrading the existing refining units as well as setting up new petrochemical facilities, which will turn the refinery into a refining and petrochemical complex. The project will focus on upgrading two existing units: the 2.2 million mt/year wax oil hydrocracker and the 2.4 million mt/year gasoil hydrogenation refining unit. For the petrochemicals part, around 11 main units will be constructed, which include a 1.2 million mt/year ethylene cracker, a 450,000 mt/year HDPE unit and a 500,000 mt/year FDPE unit, as well as other facilities.

** Sinopec's flagship refinery Zhenhai Refining & Chemical will start construction work in October at its phase 2 expansion project, adding another 11 million mt/year of refining capacity as well as 1.5 million mt/year of ethylene plant. Once the project is completed, Zhenhai Petrochemical's primary capacity will rise to 38 million mt/year, with 3.7 million mt/year of ethylene capacity. This follows the completion of the phase 1 expansion project, which was delivered on June 29 2021. Phase 1 project involved setting up a 4 million mt/year CDU and a 1.2 million mt/year ethylene unit, which started construction in April 2020. These new facilities will be integrated with the existing 23 million mt/year CDU as well as 1 million mt/year ethylene plant. In the longer term, the company has the ambition to grow itself into a refining capacity of 60 million mt/year and 7 million mt/year of ethylene by 2030.

** Sinopec's Changling Petrochemical in central Hunan province plans to start construction for its newly approved 1 million mt/year reformer in 2021 and to bring its port upgrading project online by end-December.

** Japan's Idemitsu Kosan plans to start work on raising the residue cracking capacity at its 45,000 b/d FCC at Chiba.

** China's Sinopec Luoyang Petrochemical expects the start-up of the 2 million mt/year CDU expansion to be delayed to H1 2021.

** Axens said its Paramax technology has been selected by state-owned China National Offshore Oil Corp. for the petrochemical expansion at the plant. The project aims at increasing the high-purity aromatics production capacity to 3 million mt/year. The new aromatics complex will produce 1.5 million mt/year of paraxylene in a single train.

** Construction of a new 1 million mt/year coker at Chinese independent refinery Haiyou Petrochemical, in eastern Shandong, has been put on hold.

** Sinopec's Jinling Petrochemical refinery in eastern China will build a new 600,000 mt/year vacuum distillation unit.

Launches

Existing entries

** China's private Shenghong Petrochemical is preparing for official trial runs at Lianyungang on August 26 after the completion of construction of its core facilities on June 30. The core facilities include a 16 million mt/year CDU, sulfur recovery units, naphtha hydrocracker and its crude tanks.

** Chinese privately owned refining and petrochemical complex Zhejiang Petroleum & Chemical is scheduled to start up the second 10 million mt/year CDU at its 20 million mt/year Phase 2 project. It launched the first CDU of the second phase expansion project in November 2020. The refinery first came online in December 2019.

** Honeywell said China's Shandong Yulong Petrochemical will use "advanced platforming and aromatics technologies" from Honeywell UOP at its integrated petrochemical complex. The complex will include a UOP naphtha Unionfining unit, CCR Platforming technology to convert naphtha into high-octane gasoline and aromatics, Isomar isomerization technology. When completed Yulong plans to produce 3 million mt/yr of mixed aromatics. Shandong's independent greenfield refining complex, Yulong Petrochemical announced the start of construction work at Yulong Island in Yantai city at the end of October 2020. Construction work is expected to be completed in 24 months. The complex has been set up with the aim of consolidating the outdated capacities in Shandong province. A total of 10 independent refineries, with a total capacity of 27.5 million mt/year, will be mothballed over the next three years. Jinshi Petrochemical, Yuhuang Petrochemical and Zhonghai Fine Chemical, Yuhuang Petrochemical and Zhonghai Fine Chemical will be dismantled, while Jinshi Asphalt has already finished dismantling.

** Saudi Aramco continues to pursue and develop the integrated refining and petrochemical complex in China with Norinco Group and Panjin Sinchen, the company said Sep. 30. The joint venture plans to build an integrated refining and petrochemical complex in northeast China's Liaoning province Panjin city with a 300,000 b/d refinery, 1.5 million mt/year ethylene cracker and a 1.3 million mt/year PX unit. Saudi Aramco denied an earlier information that it has pulled put of the project.

** PetroChina officially started construction works at its greenfield 20 million mt/year Guangdong petrochemical refinery in the southern Guangdong province on Dec. 5, 2018.

** 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.