Apr 11 2022
Chinese refineries will slash throughput in April and lift oil product exports from initial plans to compensate for falling domestic demand due to COVID-19 lockdowns.
As a result, 10 refiners from the 11 polled Sinopec and PetroChina refining sources said they have cut their April throughput by 30,000-100,000 mt from their initial planned volumes or plan to reduce.
These include Sinopec's 14 million mt/year Shanghai Petrochemical, which has been locked down since late March. It will lower throughput by 40,000 mt to 1.19 million mt in April. The neighboring 8 million mt/year Anqing Petrochemical plant has trimmed throughput several times since April 1 to get the current target of about 550,000 mt from an initial 650,000 mt.
Another neighbor, the 16 million mt/year private greenfield Shenghong Petrochemical has further delayed its startup, with no fixed commission schedule, given high oil prices coupled with weak product demand, according to a company source.
Down south in Guangzhou, oil product sales are also slow. The 13.2 million mt/year Sinopec plant has cut throughput by 40,000 mt from planned to 990,000 mt in April.
In eastern China's Shandong province, independent refineries have even cut their average utilization rates to 49.4% as of April 6, against 57.1% a month earlier, according to local information provider JLC.
In northeast China, three of PetroChina's refineries in Liaoning province have reduced their April throughput by 30,000-50,000 mt from original plans, according to sources with the plants.
Meanwhile, Russian crude imports by China's independent refiners slumped 44.4% year on year to a 10-month low of 1.5 million mt in March as a regular buyer ChemChina shut for maintenance its Huaxing Petrochemical. The volume is expected to fall further as a few independent refineries step away from Russian cargoes amid uncertainties in payment and shipping amid the ongoing Russia-Ukraine war and negative refining margins.
Japan's largest refiner ENEOS does not plan to sign any Russian crude oil import contracts following Russia's invasion of Ukraine, ENEOS Holdings Chairman Tsutomu Sugimori said March 22.
"Following the Ukraine invasion, we have not signed any contracts [for Russian crude]," Sugimori told an online press conference as the president of the Petroleum Association of Japan. "We do not expect to import [Russian crude] for the moment." ENEOS, however, will receive a few ships carrying Russian crude cargoes until April from its purchase contracts signed prior to the invasion in February, Sugimori said.
Japan's second largest refiner Idemitsu Kosan has decided to suspend new Russian crude oil trades for imports amid uncertainty over payment and logistics disruptions, a company spokesperson told S&P Global Commodity Insights March 23.
Cosmo Oil, Japan's third largest refiner, does not currently procure Russian crude oil, and it does not have any plans to procure the barrels, a Cosmo Energy Holdings spokesperson said March 23.
Japanese refiner Taiyo Oil is currently seeking clarity about whether it can continue to lift term crude oil supply from Russia, which it relies on for 20%-30% of its crude procurement, amid uncertainty over payment settlements and shipping, a company spokesperson said April 4.
Meanwhile, Japan's Ministry of Economy, Trade and Industry revoked March 31 Taiyo Oil's safety inspection permission at its sole 138,000-b/d Kikuma refinery at Shikoku in western Japan following its violations of safety regulations.
Following the revocation, Taiyo Oil will now have to conduct a refinery maintenance program every year and get it approved by the local authorities until the company restores the permission, a METI official said.
Prior to the suspension of its safety inspection permission, Taiyo Oil planned to shut two crude distillation units at the Kikuma refinery over May 30-Aug. 17 for a large scheduled maintenance program that takes place every four years.
Separately, Japan's largest refiner ENEOS said March 28 it restarted the 170,000 b/d No. 2 crude distillation unit at the Kawasaki refinery in Tokyo Bay on March 25 after it was shut March 16 due to earthquake-led power outages.
ENEOS said April 4 that it plans to restart the distillation unit at the Sendai refinery in the northeast and the Chiba refinery in Tokyo Bay in mid-April.
At the Sendai refinery, all refining units were shut while all refining units at ENEOS's Chiba Refinery and the No. 2 crude distillation unit at the 247,000 b/d Kawasaki refinery, both in Tokyo Bay, were suspended.
In other news, China aims to develop renewables-based hydrogen and curb fossil fuel-based hydrogen production which currently dominates the nation's hydrogen supply, according to its hydrogen industry development plan. The development plan jointly released by China's top economic planner National Development and Reform Commission, or NDRC, and energy regulator National Energy Administration lays out high-level guidelines for its hydrogen supply chain from 2021 to 2035. China has already become the world's largest hydrogen producer with 33 million mt/year of supply, but 63.5% of this is produced from coal, 21.2% as industrial byproduct, 13.8% from natural gas and only 1.5% from water electrolysis that is not fully powered by renewables-based electricity, according to the China Hydrogen Alliance.
Quantitative targets are only set up until 2025, including building up 100,000-200,000 mt/year of renewables-based hydrogen production, realizing 1 million-2 million mt/year of CO2 emissions reduction and 50,000 hydrogen fuel cell vehicles or FCEVs by 2025, the report said.
By 2030, the plan aims to build up a more comprehensive supply system for clean hydrogen and enable broad applications of hydrogen in different sectors to support China's carbon peaking 2030 target.
By 2035, the plan expects to have a more sophisticated ecosystem for hydrogen, covering diverse applications in transportation, energy storage, industrial and other sectors. Renewables-based hydrogen will occupy a significantly increasing share in China's energy consumption mix and become an important backbone for the nation's energy transition, the plan said.
NEW AND ONGOING MAINTENANCE
UPGRADES
LAUNCHES
** Japan's Cosmo Oil shut one of two crude distillation units at its 177,000 b/d Chiba refinery in Tokyo Bay after a fire at a furnace April 2, a company spokesperson said April 5. The fire broke out at around 6:15 pm local time (0915 GMT.) April 2, and the local fire department confirmed that it was put out at 11:45 pm, the spokesperson said. No one was injured, and it was not clear when Cosmo would be able to resume the CDU, the spokesperson said.
** PetroChina's Yunnan Petrochemical refinery in southwestern Yunnan province, which shut its 4 million mt/year residual hydrogenation unit and some of its relative downstream facilities due to a blast in December, is fully back online.
** 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.
** Japan's 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.
** 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.
** Private greenfield Shenghong Petrochemical has further delayed its startup, with no fixed commission schedule, given high oil prices coupled with weak product demand. The refinery initially planned to start up in end August, but this was postponed to end-December and then to January.
** 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.