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REFINERY NEWS ROUNDUP: June crude throughput in China at record high

Crude oil throughput at China’s domestic refineries jumped 9% year on year to an all-time high of 14.14 million b/d in June, absorbing some of the record high imports for the month, and the volume is set to stay high in July.

It was also the first time that China’s crude throughput rose above 14 million b/d, National Bureau of Statistics data released July 16 showed. The previous record high was 13.84 million b/d in December 2019.

The strong growth in throughput was primarily driven by record high crude imports in recent months and is expected to remain high in July to make room in storage for cargoes waiting in Chinese waters because of port congestion.

Chinese state-run and independent refiners took full advantage of low oil prices in the second quarter and bought aggressively, resulting in crude imports surging 34.4% year on year to hit a fresh high of 12.99 million b/d in June, 14.6% more than the previous record of 11.34 million b/d in May, data from the General Administration of Customs showed on July 14.

As a result, China’s state-owned refineries lifted run rates to 80% in June from 76% in May and 79% in June 2019, data collected by S&P Global Platts showed.

In the independent sector, Zhejiang Petroleum & Chemical continued to boost run rates to nearly 130% of its nameplate capacity of 20 million mt/year in June, up from around 120% in May, while the 20 million mt/year Hengli Petrochemical (Dalian) maintained rates at around 115% in June, stable from May, Platts data showed.

While the average run rate at the small-scale independent refineries in Shandong also hit 79% in June from the previous record high of 77.9% in May.

Separately, China’s independent refining sector is poised to cut back on crude oil imports from August as multiple private refineries are scheduled to dismantle their crude distillation units and hand over the capacities to a new 20 million mt/year project, industry sources told Platts.

At least three Shandong-based independent refineries, including the 4.4 million mt/year Binyang Fuel Chemical, 3 million mt/year Yuhuang Petrochemical and 2.3 million mt/year Zhonghai Fine Chemical, will begin disassembling their facilities in the third quarter as the sector starts to clear the path for the $20 billion Yulong refining and petrochemical project.

Binyang Fuel Chemical has already started dismantling its refining units and the process is expected to be completed late July, according to industry and refinery sources with direct knowledge of the matter.

According to the preliminary schedule, a total of 10 independent refineries, with a total capacity of 27.5 million mt/year, will be mothballed over the next three years. The 10 refiners would also transfer all of their crude import quotas of 13 million mt/year to the new project in Yantai city, eastern Shandong province.

The 3 million mt/year Jinshi Petrochemical completed disassembling the plant in May, followed by Binyang, Yuhuang and Zhonghai.

In 2021, CDUs in four refineries with a combined capacity of 8.3 million mt/year will be dismantled. The remaining two refineries with a total 6.5 million mt/year of primary capacity would be eliminated in 2022.

The Shandong provincial government had previously set the start-up target for the Yulong mega refining complex as 2022.

Meanwhile, Japan’s crude throughput extended its fall by 4% week on week to 2.07 million b/d over July 5-11, the Petroleum Association of Japan said July 15. The latest July 5-11 weekly figure points to a refining capacity utilization rate of 58.8%, based on Japan’s design capacity of 3.5188 million b/d, down from 61.3% in the week ended July 4. The July 5-11 crude throughput was also down 30.4% from a year earlier, according to Platts data.

Near-term maintenance
New and revised entries
Japan

–Japan’s largest refiner ENEOS, previously known as JXTG Nippon Oil & Energy, has shut its sole 145,000 b/d crude distillation unit at its Sendai refinery in the northeast of Japan as a secondary unit at the refinery is undergoing maintenance, a company spokesman said July 3. ENEOS had shut the CDU on June 7, the spokesman said, but did not elaborate when it plans to restart, or which secondary unit is undergoing maintenance.
China

–China’s Sinopec Zhenhai Refining & Chemical has completed the turnaround at a 10 million mt/year crude distillation unit, or CDU, at its integrated complex, after it was shut early June for maintenance, a source familiar with the matter said on July 15. “All [units] came back,” the source said. The CDU unit is running close to 100%, the source added. The refiner had shut the 10 million mt/year CDU for maintenance after restarting its 8 million mt/year CDU early May, S&P Global Platts previously reported. The 8 million mt/year CDU and 1.8 million mt/year fluid catalytic cracking unit were shut for a turnaround between mid-March and early May. The whole complex has been undergoing a major overhaul that involves 39 units, and the turnaround program is divided into two phases, the group company had said mid-March. Sinopec Zhenhai in eastern China’s Zhejiang province is one of the biggest integrated complexes in the country.

Existing entries
Japan

–ENEOS has delayed the planned restart of two crude distillation units at its 235,000 b/d Kawasaki refinery in Tokyo Bay to late July. The No. 3, 65,000 b/d CDU at the Kawasaki refinery was initially scheduled to restart in late June, while the No. 2, 170,000 b/d CDU was to restart in early July.

–Japan’s ENEOS will take more than one year to resume operations at its sole 136,000 b/d crude distillation unit at its Oita refinery in the southwest of Japan after it was hit from a fire May 26, 2020, a company official said June 18. The fire broke out during maintenance works, which started May 12. The crude distillation tower at the sole CDU was bent from around the middle by the fire.

–Japanese refiner Idemitsu Kosan on June 15 started scheduled maintenance at Hokkaido in northern Japan until mid-September after having shut the sole 150,000 b/d crude distillation unit on June 11, a company spokesman said.

–Japanese refiner Taiyo Oil will keep running its sole 138,000 b/d Kikuma refinery in western Japan at around 60% capacity during June-July when it had earlier planned scheduled maintenance. Taiyo Oil had earlier planned to shut the 106,000 b/d No. 1 crude distillation unit at the refinery from early June and then shut the 32,000 b/d No. 2 CDU throughout July after having finished work on the No. 1 CDU. The company postponed the repairs that involve shutting down the CDUs in the wake of the coronavirus pandemic, but is currently conducting some of the statutory inspections with the CDUs still running. “We only carry out inspections that are legally required and that cannot be postponed. However, for other inspections, we plan to carry out next year or two years later at the time of large-scale regular repairs,” a source said June 11.

–ENEOS has decided to terminate its refining operations at the 115,000 b/d Osaka refinery in western Japan and turn the facility into an asphalt-fueled power plant in October 2020, it said.

China

–PetroChina’s Jinxi Petrochemical will shut for a full turnaround over July 9-Sep. 28.

–PetroChina’s Fushun Petrochemical shut for a full turnaround over late June to mid-August.

–PetroChina’s Ningxia Petrochemical will shut for a full turnaround over July 1-August 15.

–PetroChina’s Yunnan Petrochemical will shut for a full turnaround from around mid-October.

–Sinopec Tianjin Petrochemical shut its 2.5 million mt/year CDU, and a 10 million mt/year CDU for maintenance from late April or early May, to last until July.
Upgrades
Existing entries

–Japan’s second largest refiner, Idemitsu Kosan, plans to start work this summer on raising the residue cracking capacity at its 45,000 b/d FCC as it aims to increase LSFO output. Idemitsu Kosan’s upgrade at the Chiba refinery was part of its response to the International Maritime Organization’s global low sulfur mandate for marine fuels from January.

–China’s Sinopec is looking to start commercial operation at its four newly built units in the central China located Luoyang Petrochemical in August, but the startup of the 2 million mt/year CDU expansion would be delayed to H1 2021, a refinery source said. The newly built residual hydrotreater, continuous reformer, aromatics extraction unit and hydrogen concentration unit have completed construction and were delivered May 30 to turn into commissioning, the company’s official media Sinopec News reported. The project will facilitate the refinery to crack high sulfur crude oil in addition to current sweet crudes preference, and to extract every barrel into profit. Luoyang Petrochemical usually crack crudes from Middle East, West Africa, Latin America, and occasionally processes US crudes like WTI Mid-land, Mars, the refinery source said.

–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/yr. The new aromatics complex will produce 1.5 million mt/yr of paraxylene in a single train, Axens said. The Huizhou petrochemical complex has been operating an Axens Paramax complex since 2009 with 1.3 million mt/yr of aromatics production.

–Construction of a new 1 million mt/yr coker at Chinese independent refinery Haiyou Petrochemical, in eastern Shandong, has been put on hold, according to sources close to the refinery. The new coker was expected to come on stream in 2019.

–Sinopec’s Jingmen Petrochemical in central Hubei province targets to start up its newly built 2.8 million mt/year heavy oil catalytic cracker on May 30, which is the key project for the refinery in 2020, according to the company’s official social wechat platform. The 200,000 mt/year alkylation unit and the 550,000 mt/year lubricant hydrogenation unit have been online in H2 2019, according to company wechat. The alkylation unit was started up in July/August, and the lube unit in November.

–Sinopec’s 21 million mt/year Jinling Petrochemical refinery in eastern China will build a new 600,000 mt/year vacuum distillation unit. It has reconfigured its No.3 gasoline hydrotreater to a 360,000 mt/year hydrotreater to produce RMG 380 CST bunker fuel oil with sulfur content no higher than 0.5%.

–Sinopec’s Zhenhai refinery in Ningbo, eastern Zhejiang province, China, has issued four tenders for pre-construction works of its 1.2 million mt/year ethylene expansion project. The project also includes 15 million mt/year of refining capacity.
Launches
New and revised entries

–China’s independent refining sector is poised to cut back on crude oil imports from August as multiple private refineries are scheduled to dismantle their crude distillation units and hand over the capacities to a new 20 million mt/year project, industry sources told S&P Global Platts. The Shandong provincial government had previously set the startup target for the Yulong mega refining complex in Yantai city, eastern Shandong province, as 2022. The Yulong mega project has only recently received the green light from the country’s top planner National Development and Reform Commission to start planning for the construction in June. The project aims to consolidate and upgrade mostly small-scale and scattered independent refinery systems in the province in a bid to compete with new giant complexes. These include the 20 million mt/year Hengli Petrochemical (Dalian), the 20 million mt/year Zhejiang Petroleum & Chemical, Shenghong Petrochemical, as well as state-run PetroChina’s Guangdong Petrochemical and 10 million mt/year Sinopec Zhongke Petrochemical.

–KBR said it has been awarded a contract for catalyst supply for a vinyl acetate monomer VAM grassroot project at China’s Shenghong (Lianyungang) refinery. The 300,000 mt/yr unit is a “key intermediate” for the production of polymers and resins for adhesives, coatings, paints, films, textiles and other products. In 2019, the refinery started construction of its 16 million mt/year (320,000 b/d) CDU and 3.1 million mt/year No.1 continuous reformer. Shenghong’s refinery will only have one crude distillation unit with a processing capacity of 16 million mt/year, which will become the single largest distillation unit in China. The project is slated for completion in 2021. China’s independent Shenghong Group has opened a trading office in Singapore ahead of the start-up in the second half of 2021 of its refinery in Jiangsu province.

Existing entries

–Saudi Aramco is boosting its downstream investments in China, creating a joint venture to build a $10 billion refinery.

–PetroChina officially started construction work at its greenfield 20 million mt/year Guangdong petrochemical refinery in the southern Guangdong province on December 5, 2018. Trial operations at the refining complex are expected to start in October 2021.

–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.
Source: Platts

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