REFINERY NEWS ROUNDUP: Lower throughput in China in July

China's crude throughput likely fell in July, weighed on by maintenance at state-owned refineries and amid uneven oil product demand recovery and limited exports.

The country's four state-owned refiners trimmed their run rates to around 73.5% in July, just above the two-year low of 73.4% in May, while the private integrated Hengli Petrochemical (Dalian) cut its utilization rate by eight percentage points from June.

The reduction is unlikely to be offset by a 1.5 percentage points utilization increase in the Shandong independent refineries, suggesting a collective throughput decline on the month in July.

The 21 PetroChina refineries cut their average run rates by about five percentage points to 67.8% in July from June, a 28-month low, due mainly to maintenance at three of the polled refineries.

The three refineries -- Dalian Wepec, Hohhot Petrochemical and Huabei Petrochemical -- shut a combined capacity of 500,000 b/d for maintenance during the month.

Meanwhile, Sinochem trimmed its Quanzhou Petrochemical's crude run about 17 percentage points from June, since its 60,000 b/d of crude distillation unit was shut for maintenance from July 1.

Sinopec's Shanghai Petrochemical remains shut after an explosion in late-June. The refinery was scheduled to restart early August, a company source said.

Run rates at China's independent refineries were mixed.

Hengli started maintenance at one of its 200,000 b/d CDUs in early July, which would last until early August. As a result, the throughput at Hengli was trimmed to around 74% in July, from 82% last month.

The run rate will likely return close to normal levels of around 80% in August after the maintenance, according to a refinery source.

The 800,000 b/d Zhejiang Petroleum & Chemical also slightly cut its utilization rate to 82% in July from 84% in June.

Run rates at Shandong independent refineries continue to recover as margins improve when cracking cheap feedstocks.

The average utilization rate at Shandong independent refineries recovered to around 70% as of July 20, up by about 1.5% from a month earlier, data from local energy information provider JLC showed.

Separately, China's imports of Russian crude oil fell 10.6% from a record high in May to 1.78 million b/d, or 7.29 million mt, in June, data from the General Administration of Customs showed. The Russian volumes volume represented a 9.5% year-on-year jump in June, despite declining from 1.99 million b/d in May, according to GAC data.

Saudi Arabia remained the top crude supplier to China during the first half of the year, although the volume declined 1.1% year on year to 1.75 million b/d during the period due to a second straight monthly fall in June.

Iranian crude inflows were at 260,349 mt, or 63,612 b/d, in June, representing the third Iranian cargo to be reported by GAC in 2022, with the first two cargoes arriving in January and May, respectively.

Japan's Russian crude oil imports fell to zero in June, while its coal imports from Russia were also slashed, as the country commits to phasing out Russian oil and coal imports as part of the G7 pledge, according to the latest preliminary data from the Ministry of Finance. LNG imports from Russia, however, remained intact.

"The government is not urging companies to refrain from purchasing [Russian] crude oil as it is up to oil companies to decide which crude oil to procure," Minister of Economy, Trade and Industry Koichi Hagiuda told a news conference July 22.

"We see it was a consequence of companies' respective circumstances," Hagiuda said.

Japan's Russian crude imports fell to zero as local refiners are phasing out their import of Russian crudes, with the country's top two refiners, ENEOS and Idemitsu Kosan, having already suspended signing new Russian crude contracts. Taiyo Oil has also suspended signing new Russian crude oil import contracts following the government's decision to phase out and ban Russian oil imports.

As Japan put an end to importing crude oil from Russia in June it will likely continue to rely heavily on Middle Eastern producers as refiners find Persian Gulf supplies to be the most practical and economical feedstock option in times of high prices and inflation, market participants said.

Separately, Japan was to start formal policy discussions July 28 to introduce a fourth round of refining regulations aimed at boosting the processing volume of vacuum residue, with preferential treatment expected for efforts to decarbonize the refining process, sources said.

The new regulations would likely follow the framework of the third round of regulations, with new elements relating to decarbonization efforts by refiners to be considered as part of the regulatory response, the sources said.

The refiners' potential use of blue and green hydrogen instead of grey hydrogen in the refining process could be considered among the decarbonization efforts, the sources said.

The third round of regulations introduced in 2017 focused on increasing processed volumes at residue cracking units across Japan's refining fleet with improvements in productivity. The previous two rounds of regulations had led to a reduction in Japan's overall crude distillation capacity.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

Near-term maintenance

New and revised entries

Japan

** Japan's ENEOS completed maintenance works at the sole 35,100 b/d condensate splitter at its Kashima refinery on the east coast July 24, after having restarted the sole 168,000 b/d crude distillation unit at the refinery July 22, a company spokesperson said.

** Japan's ENEOS restarted the 77,000 b/d No. 3 crude distillation unit at its Kawasaki refinery in Tokyo Bay on July 23 after completing maintenance, a company spokesperson said July 25. The 170,000 b/d No. 2 crude distillation unit at Kawasaki, which was also shut for scheduled maintenance since May 28, restarted July 28.

China

** Sinopec's Shanghai Petrochemical remains shut after an explosion in late-June. Shanghai Petrochemical has shut all its refining facilities after an explosion and fire at its 605,000 mt/year monoethylene glycol and 400,000 mt/year purified terephthalic acid units June 18. The refinery is scheduled to restart in mid-August following the completion of maintenance that began mid-June.

** PetroChina's Dalian Wepec will restart at around Aug. 23 after a maintenance that began May 25.

** PetroChina's Yumen Petrochemical will restart around Aug. 17 following a maintenance that began July 1.

** PetroChina's Hohhot Petrochemical, which was shut for maintenance from July 15, will restart around Sept. 7. Around 10 major units, including the 5 million mt/year crude distillation unit, the 2.8 million mt/year hydrocracker and the 80,000 mt/year MTBE unit, will be shut during the maintenance. The maintenance was shortened from the initial plan of 60 days to around 54 days.

** PetroChina's Huabei Petrochemical will restart from maintenance around Aug. 20, after being shut since July 1.

** PetroChina's Karamay Petrochemical has restarted July 6. It was shut for maintenance May 20.

** PetroChina's Liaohe Petrochemical has restarted around June 16 from a maintenance since May 10.

** PetroChina's Qingyang Petrochemical shut for maintenance June 10-Aug. 1.

** Sinochem will trim down its crude throughputs at its Quanzhou Petrochemical facility in southern Fujian province in July, according to sources. The refinery will likely process about 900,000 mt of crudes, thus lowering its run rates to around 71% in July, from around 88% in June. Quanzhou shut its 3 million mt/year crude distillation unit for maintenance, at around July 1, to last for about two months, until Sept. 1., sources said. Prior to this, Quanzhou last shut its 12 million mt/year CDU and related refining units, for an overall turnaround over Dec. 1 to Jan. 19.

Existing entries

Japan

** Idemitsu Kosan will suspend refining operations at the 120,000 b/d Yamaguchi refinery in western Japan by March 2024 as part of a refining business reorganization.

** Idemitsu Kosan shut some secondary units for planned maintenance at its Hokkaido refinery in northern Japan from late May until early August but did not say if it suspended the sole 150,000 b/d CDU at the refinery.

** Taiyo Oil shut the 106,000 b/d No.1 crude distillation unit and its 32,000 b/d RFCC at its Kikuma refinery at Shikoku in western Japan on May 20 for large-scale planned maintenance done every four years. The company also plans to shut the 32,000 b/d No.2 CDU at the Kikuma refinery May 21. Taiyo Oil will restart the No.1 and No.2 CDUs early-August, and RFCC around Aug. 10.

** TotalEnergies and ENEOS will jointly conduct a feasibility study to assess production of sustainable aviation fuel at ENEOS's 270,000 b/d Negishi refinery in Yokohama city, Japan, the companies said. The proposed unit, with 300,000 mt/year of SAF capacity, would process waste or residue sources from used cooking oil and animal fat. The 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 Negishi in October. It will also decommission secondary units, including a vacuum distillation unit and fluid catalytic cracker. A 270,000 mt/year lubricants unit will also be decommissioned.

** ENEOS will decommission the sole 127,500 b/d crude distillation unit at its Wakayama refinery in western Japan in October 2023.

Upgrades

New and revised entries

** PetroChina's Guangxi Petrochemical in southern Guangxi province will expand into a refining and petrochemical complex in 2025 by adding an ethylene and petrochemical plant, according to a refinery source. The 16 petrochemical units to be set up will add a total petrochemical output of 2.76 million mt/year to the refinery. "The petrochemical plant will mostly rely on light naphtha and other feedstocks from the existing 12 million mt/year refinery," a refinery source said. Among the 16 new units, two will be set up in the refining zone, including the 2 million mt/year gasoil adsorption dearomatization unit and a 400,000 mt/year C2 recovery unit. Once completed, the overall output of gasoline and gasoil at the refinery will be reduced to maximize the feedstock for the downstream ethylene plant, according to the source. Around 14 other units will also be built along the way. These include a 1.2 million mt/year ethylene unit, a 350,000 mt/year aromatics extraction unit, a 400,000 mt/year FDPE unit, a 300,000 mt/year HDPE unit, a 300,000 mt/year EVA unit, a 100,000 mt/year H-EVA unit, a 400,000 mt/year PP unit, and a few others. Guangxi Petrochemical was set up in 2010 with an initial capacity of 10 million mt/year and was upgraded to 12 million mt/year in 2014 through the addition of a 4 million mt/year residual oil hydrodesulfurization unit, which enables the refinery to process crudes with higher sulfur content.

** China's Zhejiang Petrochemical plans to start up its new 250,000 mt/year No. 3 butadiene plant in Zhejiang around the middle of August, a company source said Aug. 3.

** A 1.2 million mt/year ethylene project by the Jilin Petrochemical in the northeastern China's Jilin province was begun early 2022.

Existing entries

** China's Sinopec Hainan Petrochemical's refinery in southern China planned to bring on stream two new refining units, a 2.6 million mt/year reformer and a 2.6 million mt/year hydrocracking unit July 30, a source with the refinery said. The 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 in December 2018. 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. On March. 8, Saudi Aramco and Sinopec said they would undertake a feasibility study looking into "optimization and expansion of capacity" at Fujian.

** Sinopec's Zhenhai Refining and Chemical refinery has raised refining capacity to 27 million mt/year refining capacity and ethylene output capacity to 2.2 million mt/year with the completion of its phase 1 expansion project at the end of June, adding a 4 million mt/year crude distillation unit and a 1.2 million mt/year ethylene unit. The company aims to grow its refining capacity to 60 million mt/year and 7 million mt/year of ethylene by 2030.

** Sinopec's Changling Petrochemical in central Hunan province plans to start construction for its newly approved 1 million mt/year reformer.

** 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

** PetroChina targets to have its greenfield 20 million mt/year Guangdong Petrochemical complex in southern Guangdong province commissioned by the year end. PetroChina delivered a 2.6 million mt/year aromatics unit and two 3 million mt/year continuous reformers at the Guangdong project July 30. This came after two crude distillation units of 10 million mt/year each were delivered on June 27.

PetroChina has also delivered two crude distillation units at its greenfield 400,000 b/d Guangdong Petrochemical in the southern Guangdong province, the company said on its official website June 27. The Guangdong plant is PetroChina's latest greenfield integrated refinery in southern China Jieyang city, featuring a 2.6 million mt/year aromatics unit and a 1.2 million mt/year steam cracker.

Guangdong Petrochemical was initially proposed in 2011 and scheduled to be built by a 60:40 joint venture between PetroChina and Venezuela's state-run PDVSA. It was designed to process only Venezuelan crude Merey 16.

But the project was stalled partly due to debt-ridden PDVSA having lost the ability to raise funds.

PetroChina subsequently adjusted its crude slate design in March 2018 to process Basrah Heavy crude from Iraq and heavy crude oil from Iran, as well as Merey 16.

It officially started construction works at the refinery in the southern Guangdong province on Dec. 5, 2018.

The construction work includes setting up 41 units, including a 20 million mt/year refining complex, a 1.2 million mt/year naphtha cracker, and a 2.6 million mt/year aromatics plant.

Existing entries

** 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.

** 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 been dismantled.

** 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.