REFINERY NEWS ROUNDUP: Refineries in China stock up on crude, increase output

London — China's independent refiners ratcheted up crude imports in May by 71.1% year on year to a record high, sending a bullish signal to the global oil market that the recovery in Chinese energy demand is on track.

An increasing number of cheap crude arrivals in Shandong, home of China's independent refineries, has caused lengthening queues at the province's key crude ports, refinery and port sources told S&P Global Platts Friday. There had been no queue for discharging since February, but cargoes now have to wait for more than five days to unload, port sources said. Refining sources said it is now taking at least 20-30 days to discharge at Qingdao port, China's top crude port by turnover, due to a long queue.

China's fuel oil imports from Singapore in May dropped 38.5% month on month to 32,469 mt, as local refiners ramped up output to ensure adequate supply, Enterprise Singapore data showed.

According to market sources, China has been cutting its imports as local refiners increased their fuel oil production after the government approved a tax rebate on bonded bunker fuel. China produced about 700,000 mt of low sulfur fuel oil in May, up 7.7% from April, according to a local information provider. The production has been constantly rising since February when it stood at 176,000 mt, according to the data. However, trading sources expect domestic output to be capped in the next one to two months, as Chinese refineries planned to cut fuel oil production yield in order to lift gasoil output for better margin.

China's state-owned Sinopec Shanghai Petrochemical plans to skip seaborne exports of oil products in June, even though the refinery's utilization rate is set at 97% for June versus 91% in May, a refinery source said. The source added that jet fuel demand for domestic flights is recovering and the refinery plans to sell 50,000 mt to domestic airports in June.

Crude throughput at China's major refineries was expected to climb in May from April, as Shandong independent refineries continue to ramp up run rates, while state-owned oil majors keep runs steady at 76%, a monthly survey by Platts showed. "The margins are still good in May, though down slightly compared with April when crude prices were still low," an analyst said.

Both Hengli and ZPC will likely maintain run rates at 115% and 120%, respectively. The 40-plus independent refineries in Shandong province surveyed continue to lift run rates, hitting a record high of 75%, from 73.5% in April, with the previous record at 73.9% in November, according to data from local energy information provider JLC. In the state-owned sector, the oil giants -- Sinopec, PetroChina and CNOOC -- were expected to keep their average run rate more or less unchanged at around 75.8% in May, growing from 70% in March and a record low of 66.4% in February. Sinopec, the world's biggest refiner by capacity, likely kept run rates at around 80% in May, stable from April. PetroChina lifted run rates marginally to around 69% of nameplate capacity, from about 68% in April and 64% in March, the survey showed.

Of the 17 surveyed PetroChina refineries, 13 likely raised their run rates, with Guangxi Petrochemical leading the jump.

PetroChina's Guangxi Petrochemical has been operating at around 78% of run rates, after restarting around April 20 from a scheduled maintenance. PetroChina shut its Guangxi Petrochemical in southern Guangxi province on February 9 for a scheduled 50-day maintenance. The works were expected to help the refinery to offset stock pressure after product demand slumped due to the coronavirus pandemic.

Meanwhile, Japan's second-largest refiner Idemitsu Kosan said it expects its gasoline demand to drop 12% year on year in fiscal 2020-21, with gasoil demand falling 8% and jet fuel demand plummeting 50% because of the measures taken and the reduced economic activity in the wake of the coronavirus pandemic.

Japan's estimated gasoline demand in May fell to the lowest monthly level in 37 years as consumers refrained from traveling at the beginning of the month, a period when driving activity typically peaks due to public holidays. Local refiners and traders remained cautious on the prospect's for gasoline demand recovery in June as people may not actively go out amid concerns over the coronavirus infection despite the recent lifting of the state of emergency.

Japan on May 25 lifted the remaining state of emergency measures for Tokyo, Chiba, Saitama and Kanagawa in the east and Hokkaido in the north, ahead of their May 31 expiry after the state of emergency was first declared April 7.

Japan's motor fuels demand dropped to its lowest in 33 years in April as people stayed at home, with domestic jet fuel demand plummeting to a 48-year low.

Japan's crude throughput over May 24-30 dropped further by 7.7% week on week to 1.82 million b/d, with its refinery utilization rate falling to just 51.8% of capacity, the Petroleum Association of Japan said.

NEW AND ONGOING MAINTENANCE, UPGRADES UPDAT

UPGRADES

LAUNCHES

Near term maintenance

New and revised entries

Japan

--Japanese refiner Taiyo Oil has postponed its planned scheduled maintenance at its sole Kikuma refinery in western Japan indefinitely in the wake of the coronavirus pandemic, a company spokesman said. Taiyo Oil had earlier planned to shut the No. 1 106,000 b/d crude distillation unit at the refinery from early June and then shut the No. 2 32,000 b/d CDU throughout July after having finished its No. 1 CDU maintenance works.

--Japanese refiner Cosmo Oil shut end May its No. 1 75,000 b/d crude distillation unit at the Chiba refinery in Tokyo Bay for scheduled maintenance for about a half month.

--Japan's Idemitsu Kosan shut on May 20 one of crude distillation units, or CDUs, at its Yokkaichi refinery in the central Japan, following an unexpected shutdown of a continuous catalyst regeneration, or CCR, unit on May 19, a company spokesman said. The spokesman said that the company is still carrying out a probe into the cause of the unexpected shutdown of the CCR and declined to identify which CDU was shut recently at Yokkaichi. It remains unclear when Idemitsu will be able to restart the CCR and the CDU, he added.

--Japan's JXTG Nippon Oil & Energy's sole 136,000 b/d crude distillation unit at its Oita refinery in the southwest was hit late May from a fire during maintenance works, a company spokesman said. The crude distillation tower at the sole CDU was bent from around the middle by the fire, the spokesman said, adding that the company is investigating the cause and any potential damage. The refiner is not under immediate pressure to procure refined products for its supply in the Kyushu region in the southwest as it had stockpiled ahead of its scheduled maintenance that started May 12.

China

--Sinopec Beihai Refining and Petrochemical restarted around May 20 after shutting for around 100 days for a maintenance since February 10.

--Sinopec Zhenhai Petrochemical shut its 10 million mt/year crude distillation unit for maintenance, after restarting its 8 million mt/year CDU early May.

--Sinopec Yanshan Petrochemical in early May restarted its 3 million mt/year CDU and 2 million mt/year FCC from maintenance starting late March.

--PetroChina's Fushun Petrochemical will shut for a full turnaround over late June to mid-August.

--PetroChina's Ningxia Petrochemical will shut for a full turnaround over July 1-August 15.

--PetroChina's Yunnan Petrochemical will shut for a full turnaround from around mid-October.

Existing entries

Japan

--Japan's JXTG Nippon Oil & Energy shut its 170,000 b/d No. 2 crude distillation unit at its Kawasaki refinery in Tokyo Bay for a scheduled turnaround from April 18 until early July, a company spokesman said. JXTG is currently running scheduled maintenance program at its 65,000 b/d No. 3 CDU at Kawasaki refinery in Tokyo Bay until late June.

--Japanese refiner Cosmo Oil started scheduled maintenance program at the Chiba refinery in Tokyo Bay in mid April with a shutdown of the 102,000 b/d No. 2 crude distillation unit.

--In June, Idemitsu Kosan plans to shut its 150,000 b/d Hokkaido refinery in northern Japan for scheduled maintenance, Chairman Takashi Tsukioka said. Idemitsu's scheduled maintenance at the Hokkaido refinery is expected to last more than one month.

--Japan's largest refiner JXTG Nippon Oil & Energy has decided to terminate its refining operations at the 115,000 b/d Osaka refinery in western Japan and turn the facility into an asphalt-fueled power plant in October 2020, it said.

China

--Sinopec Tianjin Petrochemical shut its 2.5 million mt/year CDU, and a 10 million mt/year CDU for maintenance from late April or early May, to last until July.

--PetroChina's Jinxi Petrochemical will shut for a full turnaround from June 25 to August 27.

--At China's Hengli Petrochemical (Dalian) one reformer was idled for maintenance and there is no date to resume production, a source said. The refinery has three reformers, with capacity of 3.2 million mt/year each.

--PetroChina's 5 million mt/year Dagang Petrochemical will shut for maintenance from May 1 for a turnaround until July 1.

--PetroChina's Dalian Petrochemical in northeastern Liaoning province shut a CDU in early April, ushering in the start of an overall maintenance at the refinery that will last for around two months.

Upgrades

New and revised entries

--China's Sinopec is looking to start commercial operation at its four newly built units in the central China located Luoyang Petrochemical in August, but the startup of the 2 million mt/year CDU expansion would be delayed to H1 2021, a refinery source said. The newly built residual hydrotreater, continuous reformer, aromatics extraction unit and hydrogen concentration unit have completed construction and were delivered May 30 to turn into commissioning, the company's official media Sinopec News reported. The project will facilitate the refinery to crack high sulfur crude oil in addition to current sweet crudes preference, and to extract every barrel into profit. Luoyang Petrochemical usually crack crudes from Middle East, West Africa, Latin America, and occasionally processes US crudes like WTI Mid-land, Mars, the refinery source said.

Existing entries

--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/yr. The new aromatics complex will produce 1.5 million mt/yr 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/yr of aromatics production.

--Construction of a new 1 million mt/yr 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 Jingmen Petrochemical in central Hubei province targets to start up its newly built 2.8 million mt/year heavy oil catalytic cracker on May 30, which is the key project for the refinery in 2020, according to the company's official social wechat platform. The 200,000 mt/year alkylation unit and the 550,000 mt/year lubricant hydrogenation unit have been online in H2 2019, according to company wechat. The alkylation unit was started up in July/August, and the lube unit in November.

--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, China, has issued four tenders for pre-construction works of its 1.2 million mt/year ethylene expansion project. The project also includes 15 million mt/year of refining capacity.

Launches

Existing entries

--Sinopec's greenfield Zhongke (Guangdong) refinery in Zhanjiang has received the first crude cargo for its trial startup by end-May, government-backed local media Zhanjiang Broadcasting Television reported. Zhongke was to feed its units by end-May, run through all the refining units by end-June and all petrochemical units by end-July, the media reported. This represents a slight delay from the last targeted start to trial runs of April 2020. Zhongke refinery will be Sinopec's first greenfield refinery in 11 years, since the startup of its 12 million mt/year Qingdao Refining and Petrochemical refinery in eastern Shandong province in mid-2008. Construction works at the Zhongke (Guangdong) refinery complex, which have begun since April 2018, are scheduled to be completed by December 2019, Platts reported earlier. The Zhongke refinery complex involves building a 10 million mt/year crude distillation unit, 4.2 million mt/year fluid catalytic cracking unit, 4.4 million mt/year residual oil hydrotreater, 2 million mt/year hydrocracker, 2 million mt/year gasoil hydrotreater, 1.8 million mt/year continuous reforming unit, 2 million mt/year light-hydrocarbon reclaiming unit and associated facilities. Besides, it also includes building an 800,000 mt/year ethylene steam cracking unit, 400,000 mt/year pyrolysis gasoline hydrogenation, 550,000 mt/year polypropylene, 350,000 mt/year high density polyethylene, 250,000 mt/year EO, 400,000 mt/year EG, 100,000 mt/year EVA, 180,000 cu m/hour coal-to-hydrogen units, a power station and other utilities and facilities.

--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 320,000 b/d refinery in Jiangsu province. 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.

--Saudi Aramco is boosting its downstream investments in China, creating a joint venture to build a $10 billion refinery and acquiring a stake in the greenfield Zhejiang Petrochemical refinery and petrochemical complex.

--PetroChina officially started construction work at its greenfield 20 million mt/year Guangdong petrochemical refinery in the southern Guangdong province on December 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.