China has given the green light to plans for a huge refinery and a $ 20 billion petrochemical complex in Shandong province, home to the country’s independent refiners, Reuters reported on Tuesday, citing two sources. industry familiar with the approval process.
The mega petrochemical complex has been in the works for years, but it now appears that the world’s largest oil importer is looking to spend money on petroleum infrastructure to boost the economy affected by the coronavirus.
The National Development and Reform Commission of China (NDRC) approved the Shandong Yulong petrochemical project on Monday, Reuters sources said.
The Shandong Province complex – where most of China’s independent refiners, the so-called teapots, are based – is now slated to host the mega-project, which analysts say will become operational in late 2024. Shandong Yulong Petrochemical will have ” an oil refinery with a processing capacity of 400,000 barrels per day (b / d) and an ethylene plant producing 3 million tonnes per year. According to Reuters sources, the investment in the project will amount to some 19.7 billion US dollars (140 billion Chinese yuan).
Some independent refiners in Shandong have struggled in recent months after huge refineries such as Hengli Petrochemical and Zhejiang Petrochemical started operations last year.
The Shandong Yulong Petrochemical project, while helping the Chinese petrochemical industry by reducing imports, could exacerbate the overabundance of refined petroleum products in the country, according to Reuters.
At the same time, Chinese crude oil imports are expected to increase by 2% in 2020, despite COVID-19, thanks to low oil prices, according to a think tank affiliated with the Chinese oil giant China National Petroleum Corporation (CNPC).
Last month, the Chinese National People’s Congress (NPC), the largest annual policy-making event in the communist country, did not set an annual economic growth target due to the “great uncertainty” of the recovery after coronavirus.
By Tsvetana Paraskova for Oilprice.com
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