A US$20 billion refinery and petrochemical complex in Shandong province, China, has officially been launched for construction. The province is apparently the home of several Chinese refiners according to a local newspaper. Earlier this year, China gave the go-ahead to plans for the colossal refinery and petrochemical complex Yulong, which will include a refinery with a crude processing capacity of 400,000 barrels per day (BPD) and an ethylene plant producing 3 million tons per year. Â Investment in the project would be some 140 billion Chinese yuan, or US$20.85 billion. Despite the fact that China’s demand for fuel will peak in around five years, increasing the risk of flooding the region with cheap exports, the state is going forward with investing in several new mega-refineries such as this.
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The Yulong project was one of around 500 industrial projects whose construction has started in the province of Shandong over the past week, Chinese media reported. The total investment in those projects is estimated at US$81.1 billion (544.7 billion yuan). The first phase of the complex, the 400,000-BPD refinery, is expected to be completed by 2025. The units in the first phase are designed to process crude oil from the Middle East—Saudi Arabia’s Arab Extra Light and crude from Kuwait, Argus reported earlier this week.
At least four projects with about 1.4 million barrels a day of crude-processing capacity, more than all refineries in the U.K. combined, are under construction. That’s after the country already added 1 million barrels since the start of 2019. All that capacity will add more petroleum products and plastics just as China National Petroleum Corp. sees fuel demand peaking in 2025 as electric vehicles sap consumption. This positions China to be an even bigger exporter of fuel, endangering refinery operations from South Korea to Australia to Europe.
