China's Shandong independent refiners face environmental hurdles

Shandong-based independent refiners may be heading for more trouble after China's environmental authorities said some of those had added extra capacity without the required clearances.

The Ministry of Ecology and Environment said in the week started Dec. 12 that 19 independent refineries in Dongying city, with a combined 60.4 million mt/year primary capacity, were found to have violated environmental requirements.

Those refineries are regulated by the provincial government and there were issues regarding construction without approval, the ministry said in a statement, without giving a list of the plants.

In addition to those 19 refineries, there were issues in relation to Shandong Guanyue Petrochemical adding 3.5 million mt/year of refining capacity without approval. Dongcheng Holdings also has crude distillation units that should have been mothballed, according to the statement.

The companies could not be reached for comments.

Dongying is the refining hub in eastern China's Shandong province where more than 20 independent refineries are located.

Shandong is home to the country's independent refineries with a total refining capacity of 169.4 million mt/year. They account for around 52% of China's independent refining capacity, according to JLC, a local energy information provider.

Shandong independent refineries have been subject to various checks from different government authorities on taxes, operations and environmental protection this year, which has affected their run rates and demand for future cargoes, according to refinery sources and analysts.