REFINERY NEWS ROUNDUP: Independent plants in China postpone works on high runs

London — China's independent refiners lifted their average utilization run rate to a record high of 79.3% in February, encouraged by robust refining margins and a gradual rebound in demand for gasoil and gasoline after the Lunar New Year holiday period, data from JLC showed.

The February run rate was up five percentage points from January's level of 74.3%, and up from a historical low of 43.8% a year earlier when more than 10 independent refineries shut down during the initial spread of COVID-19.

Meanwhile, refining margins for cracking imported crude have moved into positive territory of around Yuan 16/mt ($2.3/mt), from the negative territory of minus Yuan 43/mt in January, according to JLC. As a result, some refineries, which had planned to shut for maintenance from March onward, have postponed their plans until May. This includes the 5 million mt/year Zhenghe Petrochemical.

The 2.2 million mt/year Kelida Petrochemical will be the only refinery to shut for maintenance in March. But due to Kelida's limited capacity, this is unlikely to make a big impact on overall run rates in March.

Over the April-June period, around 27.4 million mt/year of capacity has been planned to shut down at seven independent refineries. But trade sources said that the plan could change depending on refining margins at that time.

Meanwhile, China's crude oil throughput jumped 17% year on year to 14.19 million b/d in January-February, although the level was unchanged from December, National Bureau of Statistics data showed. The sharp year-on-year increase was due to a lower level in the corresponding period last year amid the coronavirus outbreak.

The average utilization rate across the four key state-owned refiners -- Sinopec, PetroChina, CNOOC and Sinochem -- hit a seven-month high of 82.8% in February.

The three 10 million mt/year CDUs at the private complex Zhejiang Petroleum & Chemical ran at an average of almost 100% in February.

However, China's crude throughput has started to fall in March with refinery maintenance kicking in since late February, and likely to continue over April-June.

A combined capacity of 36 million mt/year of refining capacity at five state-owned refineries has been offline till late March, including four from Sinopec and one from CNOOC.

ZPC's second 10 million mt/year CDU in its phase 2 was slated to start trial runs by end March, which would help to cap the reduction.

China's Sinopec Shanghai Petrochemical, which exports jet fuel and supplies it to domestic airports, plans to raise its jet fuel production by 32% year on year to 1.49 million mt in 2021, in anticipation of the easing of travel bans. The refinery's planned jet fuel yield in 2021 is at 10.5%, still below the pre-COVID-19 level of 12.4% reported for 2019 but above the 7.7% in 2020.

In addition, Shanghai Petrochemical targets to hike its oil product production yield to 61.2% in 2021 from 57.1% in 2020 and 60.5% in 2019, suggesting that the company will be reducing its petrochemical yield.

In an effort to meet China's carbon neutrality target by 2060, the producer plans to cut carbon emissions by 100,000 mt in 2021 through adopting new technology and building new facilities to increase energy efficiency. It also plans to invest in green energy development, such as hydrogen, wind power and solar power.

Shanghai Petrochemical targets to invest Yuan 30 million to build a hydrogen supply center for fuel cells, which is to be completed in 2021. The center, which is a joint venture with Sinopec's Shanghai Petroleum, will be able to supply 2 mt/day of hydrogen.

PetroChina's 110,000 b/d Daqing Refining and Petrochemical in northeastern Heilongjiang province plans to increase gasoline exports to 70,000 mt in March. This will be up from just one cargo of 35,000 mt exported in February.

State-owned PetroChina's 20.5 million mt/year flagship Dalian Petrochemical refinery, in northeastern Liaoning province, will raise March gasoline exports by 75% month on month to 280,000 mt as it increases gasoline output on better margins. In February, Dalian exported around 160,000 mt of gasoline.

Sinopec's Fujian Refining and Chemical Co. refinery in southeastern Fujian province plans to export 40,000 mt of gasoil in March, stable from February.

State-owned PetroChina plans to increase its oil product exports by about 96% month on month in March. A total of 300,000 mt of oil products will be exported, including four cargoes of gasoline and four cargoes of gasoil.

China's 200,000 b/d West Pacific Petrochemical Corp. refinery, or Wepec, in the northeastern Liaoning province, plans to raise its March gasoline exports by 66.7% from February to around 175,000 mt. This would be equivalent to five cargoes of gasoline shipments in March from three exported in February, the source said.

China's private refiner Zhejiang Petroleum & Chemical is set to start trial runs at its PX plants in Q2-Q3. This will be after the startup of the second 200,000 b/d crude distillation unit at the 400,000 b/d phase 2 refinery by the end of March, which will double the facility's total refining capacity to 800,000 b/d.

Separately, Japan's oil products output rose 4.2% week on week to 17.93 million barrels over March 14-20, the Petroleum Association of Japan said March 24. Japan's crude throughput rose 1.9% week on week to 2.51 million b/d in the week over March 14-20, with its crude run rates having increased to 72.7% in the week. Japan's refinery runs rose further from 71.4% in the previous week to March 13.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

Near-term maintenance

New and revised entries China

** PetroChina's Dagang Petrochemical will shut for maintenance over mid-May and end June.

** Sinopec's Qilu Petrochemical will shut a 4 million mt/year CDU for maintenance from mid-August till late September.

** Sinopec's Shijiazhuang Petrochemical will be shut for an overall maintenance over end-August till end-October.

Japan

** A fire occurred at Japan's ENEOS Chiba complex during maintenance at midnight on March 5. The fire was extinguished shortly afterward and no one was injured. All units at the Chiba refinery were shut for regular maintenance on Feb. 5, and so far it is scheduled to resume operations in mid April.

** Japan's ENEOS said March 22 it plans to restart the fire-hit sole 136,000 b/d crude distillation unit at its Oita refinery in the southwest in August 2021. The restart of the Oita CDU comes after the investigative committee, including external experts, compiled a final report, which has been accepted by the relevant authorities. ENEOS, which has been transferring oil products from its other refineries in Japan to Oita, will consider the optimal run rate for the group's refineries in an effort to ensure stable supply, following this latest plan for the restart of its Oita CDU, a company spokeswoman said. The investigative committee concluded it was iron sulfide and other materials inside the CDU that had caused the fire during the scheduled maintenance. ENEOS will undertake preventive measures approved by the committee to ensure its safety, both during maintenance works and normal operations. A fire broke out at ENEOS' Oita CDU on May 26 last year during scheduled maintenance that had started on May 12.

Existing entries

Japan

** Japan's largest refiner ENEOS said March 2 it plans to restart its 145,000 b/d Sendai refinery in northeast Japan in the first half of April, which has been suspended since the strong earthquake offshore Fukushima late Feb. 13.

** 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 as well as the sole 100,000 b/d CDU at the Sakai refinery in western Japan for scheduled maintenance in autumn, a spokeswoman said Feb. 16. The works are expected to last about a month at both units, the spokeswoman added, but declined to add further details.

** Japan's largest refiner ENEOS has shut the sole 129,000 b/d crude distillation unit at the Chiba refinery in Tokyo Bay for scheduled maintenance on Feb. 5, a spokeswoman said. The maintenance would last until mid-April.

** Japan's ENEOS plans to shut in late February the two crude distillation units at the Mizushima-B plant in western Japan for scheduled turnarounds. ENEOS' scheduled shutdown of the 95,200 b/d No. 2 crude distillation unit will last until late April, while the 105,000 b/d No. 3 CDU will shut until early June.

** Japanese refiner Fuji Oil plans to shut its sole Sodegaura refinery in Tokyo Bay for a large-scale regular maintenance from mid-May to end-June, a company spokesman said. The large-scale maintenance is carried out once every four years at the refinery, and is expected to last for more than a month, he added.

** Japan's largest refiner 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, bringing down its total refining capacity to around 1.75 million b/d. ENEOS' latest move comes as it has been considering ways to optimize its refining system in Japan in the face of a sharp decline in domestic oil demand, accelerated by the coronavirus pandemic, amid increased competition in Asia. Under the latest development, it will also decommission secondary units attached to the No. 1 CDU, including a vacuum distillation unit and fluid catalytic cracker, the capacities of which were not immediately disclosed. ENEOS will also decommission a 270,000 mt/year lubricant output unit at the Negishi refinery.

** Due to the pandemic, Japanese refiner Taiyo Oil postponed works at Kikuma that would have involved shutting down the CDUs to 2021 or the year after to coincide with large-scale regular repairs.

China

** Sinopec's Jinan Petrochemical was shut end-February for maintenance until early April.

** CNOOC's Huizhou Petrochemical will shut the Phase 2 refinery of 10 million mt/year capacity for maintenance over March 4-April 22.

** Sinopec's Cangzhou Petrochemical will shut the entire refinery for maintenance over May 10-June 30.

** Sinopec's Jiujiang Petrochemical will be shut for maintenance over March-April.

** Sinopec's Yanshan Petrochemical will be shut for maintenance over May-June.

** Sinopec's Yangtze Petrochemical will shut some secondary units for maintenance over March-April.

** PetroChina's Jilin Petrochemical will shut for maintenance over May-June.

** PetroChina's Fushun Petrochemical will be shut for an overall maintenance over June-July.

** Sinopec's Maoming Petrochemical will shut a 10 million mt/year CDU for maintenance over early-June till mid-July.

** Sinopec's Shijiazhuang Petrochemical will be shut for an overall maintenance over end-August till end-October.

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

** Sinopec's Jinling Petrochemical has shut an 8 million mt/year CDU as well as some secondary units for about 40 days of maintenance since Nov. 18, 2020.

** Sinopec Shanghai Petrochemical will gradually shut its units for a scheduled full maintenance March 1, a company source said. It will shut the petrochemical units from March 1 while the refining units, including its two crude distillation units, will be shut from April 15, the source said. Sinopec Shanghai plans to complete the maintenance on June 8, the source added. In February, the refinery planned to process 1.2 million mt of crude oil, accounting for 98% of its capacity.

** Sinopec's Changling Petrochemical in central Hunan province is shut for a 55-day maintenance from around Feb. 19, the refinery said on its official WeChat platform. A total 47 maintenance projects will be carried out when the refinery is shut in February, including whole refining units and some petrochemical units, as well as public utilities. This will also be the first maintenance after the refinery has been operating for a long haul of four years. Prior to this, the refinery usually carries out works every three years. With the maintenance, the refinery planned to process 6.35 million mt of crude oil in 2021.

Upgrades

Existing entries

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

** Japan's second-largest refiner, Idemitsu Kosan, plans to start work on raising the residue cracking capacity at its 45,000 b/d FCC as it aims to increase LSFO output. Idemitsu Kosan's upgrade at the Chiba refinery was part of its response to the International Maritime Organization's global low sulfur mandate for marine fuels from January.

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

** 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, Axens said. The Huizhou petrochemical complex has been operating an Axens Paramax complex since 2009 with 1.3 million mt/year of aromatics production.

** Construction of a new 1 million mt/year coker at Chinese independent refinery Haiyou Petrochemical, in eastern Shandong, has been put on hold, according to sources close to the refinery. The new coker was expected to come on stream in 2019.

** Sinopec's 21 million mt/year Jinling Petrochemical refinery in eastern China will build a new 600,000 mt/year vacuum distillation unit. It has reconfigured 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 Zhenhai refinery in Ningbo, eastern Zhejiang province, has issued four tenders for preconstruction works of its 1.2 million mt/year ethylene expansion project. The project also include 15 million mt/year of refining capacity.

Launches

Existing entries

** China's private refining and petrochemical complex Zhejiang Petroleum & Chemical has started trial run in one of its two 10 million mt/year CDU in the phase 2, and is expected to commission the whole phase 2 (20 million mt/year) in 2021. Zhejiang Petroleum & Chemical's phase 3 project is unlikely to launch within the 14th Five Year Plan (2021-2025), market sources and analysts told S&P Global Platts.

** 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 to start construction work at Yulong Island in Yantai city at the end of October, S&P Global Platts has reported previously. The 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.

According to the preliminary schedule, a total of 10 independent refineries, with a total capacity of 27.5 million mt/year, will be mothballed over the next three years. The 10 refiners would also transfer all of their crude import quotas of 13 million mt/year to the new project in Yantai city, eastern Shandong province. Jinshi Petrochemical, Yuhuang Petrochemical and Zhonghai Fine Chemical are the first three refineries to be dismantled this year. Yuhuang Petrochemical and Zhonghai Fine Chemical have been in the process of dismantling, while Jinshi Asphalt has already finished. Major units to be constructed include two 10 million mt/year crude distillation units, two 1.5 million mt/year ethylene crackers, as well as other related units.

** Saudi Aramco has pulled out from a joint project to build a greenfield 300,000 b/d refining and petrochemical complex in northeast China, sources with direct knowledge of the matter told S&P Global Platts on Aug. 21. Aramco originally signed a deal with China's North Industries Group (Norinco) and Panjin Sincen to form Huajin Aramco Petrochemical Co. in February 2019, during a visit by Crown Prince Mohammed bin Salman to Beijing. The JV plans to build a $10 billion integrated refining and petrochemical complex in northeast China's Liaoning province Panjin city with a 1.5 million mt/year ethylene cracker and a 1.3 million mt/year PX unit.

** KBR said it has been awarded a contract for catalyst supply for a vinyl acetate monomer grassroots project at China's Shenghong (Lianyungang) refinery. The 300,000 mt/year unit is a "key intermediate" for the production of polymers and resins for adhesives, coatings, paints, films, textiles and other products. In 2019, the refinery started construction of its 16 million mt/year (320,000 b/d) CDU and 3.1 million mt/year No.1 continuous reformer. 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. The project is slated for completion in 2021. 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 refinery in Jiangsu province.

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