SINGAPORE (Reuters) – China’s newest refiner Shandong Yulong Petrochemical is expected to start test operating its second crude oil processing unit late this month, trading sources with knowledge of the plant’s operations said on Monday.
The start of full operations at the $20 billion complex would help lift China’s crude imports and its output of refined products in 2025, offsetting some of the declines due to waning Chinese fuel consumption but putting pressure on already thin refining profits.
The refinery, located on a man-made island in Longkou county of the city of Yantai, is the latest of the four large refinery-chemical complexes that China has added since 2018 as Beijing promotes bigger and stronger manufacturers.
Yulong is starting up the second 200,000 barrel-per-day crude distillation unit (CDU) around March 23, two trading sources said.
The refiner launched its first 200,000-bpd CDU last September and it was operating around 90% of capacity, a level the plant has maintained since last November.
Yulong has also started up a 1.5 million metric ton-per-year (tpy) ethylene unit, one of the largest of its kind and one of the two units at the site, since December last year, according to three separate sources.
Other secondary units such as its reformer, which mainly converts heavy naphtha into petrochemical products, will be brought online from May, one of the sources added.
Yulong Petrochemical did not respond to an emailed request for comment.
To prepare for the new units’ launch and cope with supply disruptions of Russian oil shipments due to tougher U.S. sanctions, Yulong stepped up purchases of alternative grades from West Africa in March.
Yulong Petrochemical is 51% owned by private aluminium smelter Nanshan Group while provincial government-backed Shandong Energy Group has a 46.1% stake. The remainder is held by two local companies.
(Reporting by Chen Aizhu and Trixie Yap; Editing by Bernadette Baum)
