China to overhaul Daqing refinery, petchem sector

Spanish Market: Crude oil, Oil products, Petrochemicals
08/04/20

China is planning to expand and consolidate refinery capacity in the northeastern city of Daqing, in a move that could boost imports of Russian crude and help drive GDP growth in the industrial region.

Top economic regulator the NDRC has outlined a development plan for Daqing, part of Heilongjiang province. The plan, which covers 2019-25, aims to increase demand for locally-produced Daqing crude, raise crude processing and ethylene capacity and help refiners access the crude import market.

The Heilongjiang government is aiming to expand capacity at refineries in Daqing to 464,000 b/d of crude processing and 99,000 b/d (2.01mn t/yr) of ethylene output by 2025 under the plan. It did not give details of current capacity.

The main operational refineries in Daqing are state-controlled PetroChina's 120,000 b/d Daqing Refining & Chemical and 190,000 b/d Daqing Petrochemical plants, as well as fellow state-run firm ChemChina's 44,000 b/d Zhonglan refinery.

The government is pushing PetroChina to merge Daqing Refining & Chemical with its 100,000 b/d Harbin Petrochemical refinery, also in Heilongjiang, to create an integrated refining and chemical complex including more downstream chemical units. The two refineries currently operate 600,000 t/yr and 80,000 t/yr polypropylene plants respectively, as well as other small, simple chemical units.

The Daqing refinery processed 89,200 b/d of Daqing crude in 2019, while the Harbin refinery ran 67,500 b/d of blended Daqing and Russian grades.

Work is already underway to expand and modernise refineries in Daqing. PetroChina is upgrading a 70,000 b/d crude distillation unit (CDU) at Daqing Petrochemical to enable it to run Russian crude, and adding several secondary units. This will allow the refinery to operate at its nameplate capacity of 190,000 b/d by end of this year. It currently only operates a 120,000 b/d CDU that processes Daqing crude and a 59,000 b/d ethylene plant.

Daqing is also home to private-sector Lianyi Petrochemical, which idled its outdated 10,000 b/d CDU in 2017. Lianyi is building a new complex designed to process 60,000 b/d of Russian crude and produce 400,000 t/yr of polyethylene, 550,000 t/yr of polypropylene and around 340,000 t/yr of benzene, toluene and xylenes. The complex is due to open by the end of 2020 and aims to expand crude processing capacity by another 40,000 b/d in the years ahead.

The government will allow local independent refineries to process more Daqing crude and help the refineries win quotas to refine imported crude and non-state crude import licences, the six-year plan said.

Daqing is China's largest oil field, but output has dropped as the field matures. Production fell below 800,000 b/d for the first time in 2015 and has declined every year since then to 618,000 b/d in 2019.

PetroChina will keep output above 500,000 b/d in 2025, according to the plan. That suggests the targeted increase in refining capacity will lead to an increase in crude imports from Russia.

The refinery expansion plan is part of wider efforts by China to upgrade local industries. Daqing is one of eight cities included in an NDRC project to modernise older industries and sustain economic growth, by channelling financial support to the chosen areas. Heilongjiang, part of China's northeastern ‘rust-belt', was hit hard by industrial reforms in the 1990s as part of the country's transition to a more service-based economy.

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06/11/24

Mexican peso plummets on Trump win

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Cop 29 finance talks need leadership after Trump win

06/11/24

Cop 29 finance talks need leadership after Trump win

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Iran sounds alarm on gasoline shortage

06/11/24

Iran sounds alarm on gasoline shortage

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Iraq proposes doubling payment for KRG crude

06/11/24

Iraq proposes doubling payment for KRG crude

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UK parliament approves SAF mandate from 2025

06/11/24

UK parliament approves SAF mandate from 2025

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