REFINERY NEWS ROUNDUP: Independent plants in China turn to fuel oil instead of bitumen blend

China's independent refineries received their first fuel oil cargoes after the new consumption tax on bitumen blend took effect on June 12, according to data from Platts trade flow software cFlow for the week to June 17.

Industry participants expect more cargoes to arrive in the coming weeks as the private refining sector attempts to switch its feedstock to more cost-efficient fuel oil.

Beijing announced the introduction of a consumption tax on imported bitumen blend and cargoes of blended heavy crudes at the same rate as for fuel oil from June 12, leading to independent refineries' imported crude feedstock being largely restricted by their crude import quotas. To ensure adequate feedstock, independent refiners have become more active in the fuel oil market again, since it is subject to import tax of 1% of its value compared with 8% for bitumen blend.

Meanwhile, China's crude throughput in May was up 4.4% year on year at a record high of 60.5 million mt, marking the first time it has crossed the monthly level of 60 million mt, data released by the National Bureau of Statistics showed.

Separately, Chinese energy experts have expressed concern at the International Energy Agency's net-zero emissions pathway, citing the lack of a differentiated approach between developed and developing countries as well as unrealistic milestones to phase out fossil fuels. They said the IEA's ambitious milestones were arduous given China's continued energy demand growth, coal-dominant electricity system, and yet-to-be-reinforced market mechanisms for electricity and carbon pricing, and suggested a localized approach.

"Countries are at different stages of development; they have different energy resources and different population sizes. China is the largest energy producer and energy consumer, but its per capita energy consumption is still small," according to Xie Qiuye, dean of the China Electric Power Planning and Engineering Institute, speaking at the launch of the IEA's "Net Zero by 2050" report in Beijing. The experts agreed on the IEA's suggestion to accelerate technological innovation and renewable capacity expansions, especially in China's coal-dominant power sector. However, they believed rapidly phasing out fossil fuels could destabilize energy supply.

In other news, PetroChina's 110,000 b/d Daqing Refining and Petrochemical in northeastern Heilongjiang province plans to cancel its gasoline exports in June amid weak supply of blending components, after the government imposed a consumption tax on imported mixed aromatics, effective June 12, a source with knowledge of the matter said.

Sinopec's 184,000 b/d Hainan Petrochemical refinery in southern China plans to export about 180,000 mt of refined oil products in June, up from 150,000 mt planned for May, a refinery source said.

Japan's oil products imports rose 34% year on year to 728,298 b/d in May, marking the seventh consecutive year-on-year increase in its monthly imports on the back of increased gasoline and gasoil imports, preliminary data released on June 30 by the Ministry of Economy, Trade and Industry showed.

Gasoline imports in May more than doubled from 53,099 b/d a year ago, while gasoil imports were up nearly four times from 15,396 b/d in the same period.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

Near-term maintenance

New and revised entries

Japan

** ENEOS shut its sole crude distillation unit at the 120,000 b/d Marifu refinery in western Japan on June 22 after a fire, a company official said. The fire broke out around 8:55 pm local time June 20 from a 27,000 b/d continuous catalytic reformer, and the CCR and some desulfurization units were shut right after the fire. "We are shutting down all units [for safety reasons]," the company official said, adding that it was not immediately clear when the company would be able to restart those units.

** Japan's ENEOS restarted the sole 141,000 b/d crude distillation unit at its Sakai refinery in western Japan on June 24 after completing scheduled maintenance, a spokesperson said June 28.

Existing entries

China

** PetroChina's Jilin Petrochemical, in northeastern Jilin province, planned to shut the entire refinery for maintenance, starting from June 1 until July 19, according to the company's official Wechat account on May 31. The maintenance will last for about 48 days. The refinery last carried out an overall maintenance works over May 5-June 19, 2018.

** PetroChina's Dagang Petrochemical shut for maintenance from April 10, which will last until the end of June.

** Sinopec's Cangzhou Petrochemical shut the entire refinery for maintenance from May 10 to June 30.

** Sinopec Shanghai Petrochemical shut a 6 million mt/year CDU and secondary units for maintenance over April-June. It also shut petrochemical units from March 1 while the refining units, including its two crude distillation units, were to be shut from April 15. Sinopec Shanghai plans to complete the maintenance on June 8.

** 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 Shanghai Gaoqiao refinery will shut for maintenance from the end of October to early December.

** 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.

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

** 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 shut its sole 145,000 b/d crude distillation unit at its Sendai refinery in the northeast on June 7 for scheduled maintenance, a spokesperson said June 8. The company plans to restart the unit in mid-July, the spokesperson said.

** Idemitsu Kosan shut the 155,000 b/d No. 3 crude distillation unit at its 255,000 b/d Yokkaichi refinery in central Japan for scheduled maintenance on May 17, a company spokesperson said May 18. The turnaround will last for about one-and-a-half to two months, the person added.

** Japanese refiner Fuji Oil said May 10 it will shut the sole 143,000 b/d crude distillation unit at its only Sodegaura refinery in Tokyo Bay on May 12 for a scheduled turnaround until July 7. Fuji Oil's scheduled maintenance, which will be a major one taking place every four years, will bring down its crude throughput and oil products sales in fiscal year 2021-2022 (April-March) amid the coronavirus pandemic, a company spokesman said. For fiscal 2021-22, Fuji Oil plans to cut its crude throughput volume by 7.3% on the year to 6.250 million kl, or 107,702 b/d, and plans to keep its refinery runs at around 90%, excluding the impact from major refinery maintenance, because of the ongoing negative impact from the coronavirus pandemic, the spokesman said.

** 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 the autumn. The works are expected to last about a month at both units.

** Japan's Idemitsu Kosan plans to shut the sole 160,000 b/d CDU at its Aichi refinery from October to November.

** Japanese refiner Taiyo Oil plans to shut two CDUs at the sole 138,000 b/d Kikuma refinery between early June and early August for scheduled maintenance, a company spokesman said April 13. Taiyo Oil will shut one CDU for about a month, then shut down the other, but it has not yet decided whether to stop the 106,000 b/d No. 1 CDU or the 32,000 b/d No. 2 CDU first, the spokesman added. "We will maintain a stable supply of oil products because we carry out regular maintenance while operating one CDU," he said. Taiyo Oil undertakes large-scale planned maintenance every four years to shut all units, including the 32,000 b/d RFCC, which is scheduled in 2022, the spokesman said.

** Japan's ENEOS said March 22 it plans to restart the fire-hit sole 136,000 b/d CDU at its Oita refinery in the southwest in August. 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. A fire broke out at ENEOS' Oita CDU on May 26 last year during scheduled maintenance that had started on May 12.

** 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.

Upgrades New and revised 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, according to a refinery source. The projects include upgrading the existing refining units at Qinzho as well as setting up new petrochemical facilities, which will turn the refinery into a refining and petrochemical complex once completed. The refinery upgrading 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 includes 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, a source close to the refinery said on June 30. 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. The Yuan 40 billion ($6.19 billion) phase 1 project mainly involves setting up a 4 million mt/year CDU and a 1.2 million mt/year ethylene unit, which started construction in April 2020, according to a report from the plant's WeChat account released on June 29. These new facilities will be integrated with the existing 23 million mt/year CDU as well as 1 million mt/year ethylene plant, the source added. 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.

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 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%.

Launches

New and revised entries

** China's private Shenghong Petrochemical is preparing for official trial runs at Lianyungang after the completion of construction of its core facilities on June 30, a company source said on July 1. "The company targets to start up trial run on Aug. 26, currently waiting for crude import quota allocation for crude procurement," the source said. The core facilities include a 16 million mt/year CDU, sulfur recovery units, naphtha hydrocracker and its crude tanks, according to a release on Shenghong's official WeChat dated June 30. Located in Lianyungang in eastern China's Jiangsu province, the plant's CDU is China's biggest single CDU by capacity. Having started construction work in December 2018, the complex targets supplying paraxylene to Honggang Petrochemical and Shenghong PTA plants in Lianyungang.

Existing entries

** Chinese privately owned refining and petrochemical complex Zhejiang Petroleum & Chemical is scheduled to start up the second 10 million mt/year (200,000 b/d) CDU at its 20 million mt/year Phase 2 project in June, which will boost its demand for crude feedstock, according to refinery sources. 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. 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 are also set to 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 joint venture 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.

** 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.

** 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.