China's reliance on Middle Eastern crudes grew sharply in the first quarter of 2022, as the country reduced inflows from Russia, Brazil and the US, data from the General Administration of Customs showed April 20.
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The Middle Eastern crude deliveries rose 4.8% to 5.6 million b/d in Q1, taking a 53.8% market share in the January-March period, the data showed. Zhejiang Petroleum & Chemical drove the Kuwaiti crudes imports, which were up 30% in Q1, to meet the feedstock requirement for its new 400,000 b/d phase 2 facilities. The private complex imported about 103,000 b/d Kuwaiti crude in the January-March period, S&P Global Commodity Insights data showed.
March imports from Russia, the second-largest supplier, were down 14.1% from a year ago, leading to a near 11% drop in Russian deliveries to 1.55 million b/d in Q1. The decline in Russian crude inflows exceeded the 8.1% year on year reduction in China's total crude imports during the same period. The trend is likely to persist amid trade uncertainty in the wake of the Russia-Ukraine war, coupled with weak domestic demand and lower margins.
"Cheap Russian crudes are very attractive, but we prefer to take the barrels on a DES basis due to lower shipping risk," a source with an independent refinery, which has recently taken an ESPO cargo, said.
Meanwhile, China's oil product output yield in the first quarter of 2022 rose by 8.6 percentage points year on year to 76.2%, data from the National Bureau of Statistics showed April 22, as petrochemical demand slowed.
The country produced 130.72 million mt of LPG, naphtha, gasoline, jet fuel/kerosene, gasoil and fuel oil in the first three months of 2022, up 11.1% year on year despite crude throughput falling 1.5% over the same period.
Not only the state-run plants but also the private refining and petrochemical complexes cut their petrochemical product yield amid narrowing margin, resulting to higher oil product yield, Chinese refiners said.
NEW AND ONGOING MAINTENANCE
New and revised entries
** Japan's ENEOS has postponed the restart of both the Sendai refinery in the northeast and the Chiba refinery in Tokyo Bay, which have been suspended since mid-March, from the initial schedule, a spokesperson said April 21. They were shut in the wake of a magnitude 7.4 earthquake offshore Fukushima in the northeast late March 16. ENEOS had planned to restart those refineries in mid-April.
** Japan's Cosmo Oil restarted the fire-hit 102,000 b/d No. 2 crude distillation unit at its 177,000 b/d Chiba refinery in Tokyo Bay April 14, a company spokesperson said April 15. The company initially planned to resume operations of the CDU April 15, but restarted one day ahead of schedule, the spokesperson said. A fire broke out in the heating tube of the CDU's heating furnace April 2, the spokesperson said earlier, but did not disclose its impact on the shipments of oil products.
** TotalEnergies and ENEOS will jointly conduct a feasibility study to assess production of sustainable aviation fuel at ENEOS Negishi refinery in Yokohama city, Japan, the two companies said April 14. The proposed unit, with 300,000 mt/yr of SAF capacity, would process waste or residue sources from used cooking oil and animal fat. The two companies are considering establishing a new joint venture to produce SAF. Negishi, which is due to decommission a CDU and affiliated secondary units later this year, is located in the "largest aviation fuel demand area in Japan," the statement said.
ENEOS 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.
** ChemChina has shut for maintenance its Huaxing Petrochemical. Works started on March 15.
** Sinopec Hainan plans to completely shut for nearly two months of scheduled maintenance March 15-May 10, and there will no oil products exports in April. The Hainan refinery plans to process 370,000 mt of crude oil in March, which would be equivalent to about 47% of its nameplate processing capacity, down from 102% in February.
** PetroChina's Liaohe Petrochemical will shut for maintenance over April-June.
** Sinopec's Yangtz Petrochemical is scheduled to shut the entire refinery for maintenance over March-April.
** Sinopec's Tahe Petrochemical is scheduled to shut for maintenance from mid-March to late April.
** Japanese refiner Taiyo Oil plans to shut two crude distillation units at its sole Kikuma refinery over May 30-Aug. 17 for scheduled maintenance, a company spokesperson said March 8. It will halt a 106,000 b/d No. 1 CDU and a 32,000 b/d No. 2 CDU. "This will be a large-scale planned maintenance [which is done] every four years, and we plan to shut the No.1, the No. 2 CDUs and the [32,000 b/d] RFCC at about the same time," the spokesperson said.
** Japan's largest refiner ENEOS will decommission the sole 127,500 b/d crude distillation unit at its Wakayama refinery in western Japan in October 2023.
New and revised entries
** China's Sinopec Hainan Petrochemical's refinery in southern China plans to bring on stream two new refining units, a 2.6 million-mt/year reformer and a 2.6-million mt/year hydrocracking unit, on July 30, a source with the refinery said April 17. The two new units are part of the Hainan complex's ethylene and refining expansion project, which also includes the addition of a 1 million-mt/year steam cracker, a 400,000-mt/year pyrolysis gasoline hydrogenation unit, a 250,000-mt/year aromatics extraction unit, a 110,000-mt/year butadiene extraction unit, an 800,000-mt/year ethylene glycol unit, a 200,000-mt/year low-density polyethylene unit, a 300,000-mt/year high-density polyethylene unit and a 400,000-mt/year polypropylene unit. The construction of these units started December 28, 2018, S&P Global Commodity Insights reported earlier. The Hainan refinery's ethylene and refining expansion project no longer includes an earlier planned 5 million-mt/year crude distillation unit, according to the refinery source.
** Sinopec plans to add a petrochemical plant to its Fujian refining complex as part of its phase two expansion plans, according to a company source. "An ethylene plant will likely be added," said the source, without giving more details as the plans are still in early stage. The adding of the new chemical plant, will likely help lift the overall run rates at the refinery, sources said. On March. 8, Saudi Aramco and Sinopec said they would study possible capacity expansion at the Fujian refinery. The two companies will undertake a feasibility study looking into "optimization and expansion of capacity", Saudi Aramco said in a statement.
** Chinese Sinopec's refinery Zhenhai Refining and Chemical has a 27 million mt/year refining capacity and a 2.2 million mt/year ethylene plant, after its phase 1 expansion project of 4 million mt/year crude distillation unit and a 1.2 million mt/year ethylene unit was delivered end-June. The company aims to grow its refining capacity to 60 million mt/year and 7 million mt/year of ethylene by 2030.
** PetroChina's Guangxi Petrochemical in southern Guangxi province planned 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.
** Sinopec's Changling Petrochemical in central Hunan province plans to start construction for its newly approved 1 million mt/year reformer.
** Japan's Idemitsu Kosan plans to start work on raising the residue cracking capacity at its 45,000 b/d FCC at Chiba.
** 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 VDU.
New and revised entries
** The startup of Shenghong Petrochemical's greenfield refining complex with a capacity of 16 million mt/year in Lianyungang, eastern Jiangsu province, is likely be delayed again to the second half of this year, according to sources with knowledge of the matter April 19. Prior to this, the complex was initially planned to startup in mid-2021. However, due to slower-than-expected construction work, it was postponed to early 2022. The construction of the complex, which started in December 2018, had some core facilities delivered June 30, 2021, including the CDU, sulfur recovery units, naphtha hydrocracker and crude tanks.
** PetroChina has started constructing a low sulfur bunker fuel oil project with 2.6 million mt/year production capacity at its upcoming Guangdong Petrochemical. PetroChina targets to commission Guangdong Petrochemical by end-2022. The Guangdong plant is PetroChina's latest greenfield integrated refinery in southern China Jieyang city, featured with a 2.6 million mt/year aromatics unit and a 1.2 million mt/year steam cracker.
** Saudi Aramco said it has "taken the final investment decision" to participate in the development of a major refinery and petrochemical complex in China which is expected to be operational in 2024. The complex will be developed by Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group. The decision is subject to finalization of transaction documentation, regulatory approvals and closing conditions. The project represents an opportunity for Aramco to supply up to 210,000 b/d of crude feedstock for the complex. The complex involves a 300,000 b/d refinery, 1.5 million mt/year ethylene-based steam cracker and a 1.3 million mt/year PX unit, S&P Global Commodity Insights has reported previously.
** 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/year 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 was 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.
** 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.