State-run oil giant PetroChina will shut the last remaining crude processing unit at its biggest refinery in northern China within weeks, industry sources told Reuters on Wednesday.
Dalian Petrochemical, PetroChina’s 410,000-barrels-per-day refinery in downtown Dalian, north China, has been shutting processing units since the end of 2023.
Now the last remaining crude unit, with a capacity of 200,000 bpd, will be switched off on June 30, according to Reuters’s sources.
Dalian Petrochemical accounts for almost 3% of the total Chinese refining capacity. The facility processes predominantly Russia’s Far Eastern ESPO crude grade.
The municipal authorities of Dalian have been pushing for years for the relocation of the refinery away from Dalian city.
The relocation and the closure of the Dalian Petrochemical facility are part of that plan after several deadly incidents over the past decade at the refinery, which is located in a densely populated area in Dalian city.
PetroChina’s parent company, CNPC, reached an agreement with the Dalian authorities two years ago to build a smaller, 200,000-bpd crude oil refinery at a new refining and petrochemicals site on Changxing island.
Yet, PetroChina has yet to take a final investment decision for the new refinery, Reuters’s sources said.
Stronger economic growth than previously expected and booming demand for petrochemicals will lift China’s oil demand by 1.1% this year, according to state giant China National Petroleum Corporation (CNPC).
However, China’s consumption of transportation fuels has peaked, Wu Mouyuan, vice president of CNPC’s think tank, said earlier this year.
Like CNPC, the International Energy Agency (IEA) also believes that oil demand for fuels in China has reached a plateau.
“With the overall Chinese economy pivoting from manufacturing to services-based growth and as the adoption of electric vehicles expands in the transport sector, the data strongly suggest that the combustion uses of petroleum fuel in China have already reached a plateau and that the potential for future growth may be very limited,” IEA market analysts said in March.
By Tsvetana Paraskova for Oilprice.com
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