REFINERY NEWS ROUNDUP: April runs in China decline on lockdowns

China's crude throughput is set to reach a two-year low in April as state and independent refiners have slashed runs because of the latest COVID-19 resurgence that has hurt the country's appetite for oil products when refineries are undergoing scheduled maintenance, data from S&P Global Commodity Insights showed.

April run rates at the country's four state-owned refiners fell to 76.4%, the lowest since 76.1% in April 2020.

The utilization rate among Shandong independent refineries dropped to a two-year low of 50.1% as of April 20, data from local information provider JLC showed.

"It's still unclear about the COVID-19 controls in May, as the recent wave in Beijing has caught attention," said a Beijing-based analyst, who expressed concern that lockdowns might expand to more Chinese cities.

But fewer refineries will be under maintenance in May, partly easing the pressure to further reduce throughput, the analyst said.

Private sector utilization at the integrated Hengli Petrochemical (Dalian) dropped to about 70% in April, from 102% in March, with maintenance postponed to the second half of 2022, company sources said.

Zhejiang Petroleum & Chemical cut its run rate to about 80% in April, from 88% in March, after it shut one of its four 10 million mt/year crude distillation units.

China's independent refiners are becoming increasingly confident in snapping up attractively priced Russian crude, after an initial period of caution. After the slump in March inflows, imports of Russian crude by China's independent refiners recovered 35.7% year on year to 2 million mt in April, S&P Global Commodity Insights data showed May 9.

While state-owned refineries are cautiously buying Russian cargoes amid payment and shipping uncertainties, industry sources said independent refineries were willing to run the risk of securing discounted spot crude imports from Russia, including ESPO and Urals.

Japan's crude throughput declined 0.3% week on week to 2.86 million b/d over May 1-7, with its crude run rates falling to 82.8% in the week, data released May 11 by the Petroleum Association of Japan showed.

The crude throughput, however, rose 27.4% from a year ago, according to S&P Global Commodity Insights data. The refinery utilization rates declined from 83% the previous week to April 30.

Japan has decided to extend fuel subsidies aimed at mitigating retail price rises until the end of September and to raise the maximum level at least by 40%, the Ministry of Economy, Trade and Industry said April 26. The government started providing subsidies for gasoline, kerosene, gasoil and fuel oil to refiners and oil products importers at the end of January in the wake of steep increases in global oil prices.

The government will extend the subsidy payment period, which was due to run until the end of April, to the end of September, and raise the upper limit of subsidies to Yen 35/liter (27 cents/liter) from the current Yen 25/liter.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

Near-term maintenance

New and revised entries

China

** Sinopec's Yangtze Petrochemical is undergoing maintenance over March 15-May 28.

** Sinopec's Tahe Petrochemical plans to restart early May, following a 45-day maintenance that started March 16.

** PetroChina's Karamay Petrochemical will shut for maintenance from late May to early July.

** PetroChina's Qingyang Petrochemical will shut for maintenance from late May to mid-July.

** PetroChina's Yumen Petrochemical will shut for maintenance from June to mid-July.

** PetroChina's Hohhot Petrochemical will shut for maintenance from mid-July to mid-September.

** Sinopec's Qilu Petrochemical in eastern Shandong province has kept its crude run rate unchanged despite shutting two secondary units after an explosion on April 24, as the throughput had been at a minimal level, a company source said. "The crude throughput has already been low and difficult to cut further," a company source said. The refinery initially planned to process about 900,000 mt of crudes in early April, but has reduced this to 830,000 mt in late April, amid a slump in product demand due to Beijing's COVID-19 related controls. Its 800,000 mt/year continuous reformer and 1.4 million mt/year hydrocracker was shut down after a compressor associated with the reformer exploded, the source said. Additional safety checks and preparatory work prior to its restart will last two weeks. At the same time, a 1.5 million mt/year residual hydrocracker has been shut for maintenance from early April.

** China's Wepec cut its crude throughput twice in April after an explosion at its 2.2 million mt/year residue desulfurization unit around the middle of the month. The unit will likely remain shut until end-June, when an overall turnaround will be carried out.

Japan

** Japan's ENEOS shut its 77,000 b/d No. 3 crude distillation unit at its Kawasaki refinery in Tokyo bay May 11 until mid-July for scheduled maintenance. The company also plans to shut its 170,000 b/d No. 2 CDU at the Kawasaki refinery from end-May to end-July for turnaround.

** Japan's ENEOS plans to shut its sole168,000 b/d crude distillation unit at its Kashima refinery on the east coast for scheduled maintenance from early May to mid-July. ENEOS also has a 35,100 b/d condensate splitter at the Kashima refinery.

** Japan's ENEOS restarted its sole 129,000 b/d crude distillation unit at the Chiba refinery in Tokyo Bay on April 24, and its sole 145,000 b/d CDU at the Sendai refinery in the northeast on April 25, a spokesperson said April 26. They were shut in the wake of a 7.4 magnitude earthquake offshore Fukushima in the northeast late March 16. All units at the Sendai refinery were shut due to tremors from the earthquake, while all units at the Chiba refinery were forced to be shut due to earthquake-led power outages.

ENEOS had planned to restart those refineries in mid-April, but there had been a delay.

Existing entries

Japan

** 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.

** 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.

China

** 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.

Upgrades

Existing 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.

Launches

New and revised entries

** China's private refining complex Shenghong Petrochemical has resumed crude oil purchases ahead of the commissioning of its new refinery, sources with knowledge of the matter said May 11. The 16 million mt/year refinery has purchased 2 million barrels of Upper Zakum crude for July loading. This is Shenghong's first cargo purchase in 2022, as it holds 7.95 million mt of crude import quotas for the year. The refinery has recently started feeding crude oil into its 16 million mt/year new crude distillation unit as the initial step before a startup. But a full startup is not expected until second-half 2022, because the refinery's secondary units are not completely ready yet, a source with knowledge of the matter said. Slow domestic demand for oil and petrochemical products also discourages its startup, sources said.

The complex that started construction in December 2018 had some core facilities delivered on June 30, 2021, including a CDU, sulfur recovery units, naphtha hydrocracker and crude tanks.

Existing entries

** 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.