By Chen Aizhu
SINGAPORE (Reuters) – Eastern China-based independent refiner Hongrun Petrochemical has agreed to acquire a bankrupt oil refinery operated by state-run Sinochem Group in Shandong province, according to four sources familiar with the matter and an auction document.
Changyi Petrochemical, a Sinochem-owned plant in China’s refining hub of Shandong, drew a top bid of about 2.98 billion yuan ($411.82 million) from an unidentified party in an auction that closed on March 14, the document showed.
Hongrun Petrochemical, a private refiner based in Weifang city, where Changyi is located, was the winning bidder, the sources said, declining to be identified as they were not authorised to speak with media.
Sinochem and Hongrun did not immediately respond to requests for comment.
The refinery, which can process about 160,000 barrels per day and has been mothballed since last year, is one of three Sinochem plants in Shandong that were declared bankrupt by local courts last year amid debts and taxes owed.
The sale price is less than half the 6.4 billion yuan that Sinochem had initially sought last October, although the three refineries did not have crude oil import quotas at the time, Reuters has reported.
Hongrun, one of the larger independent refineries, known as “teapots”, in Shandong, is expected to assume Changyi’s crude oil import quota, which was allotted to Sinochem under the first issue of 2025 permits Beijing released late last year, the sources said.
Changyi’s unpaid taxes are expected to be written off, two of them said.
China’s fiercely competitive independent refining sector faces consolidation amid sluggish demand, overcapacity, and tighter regulatory scrutiny.
The acquisition will boost Hongrun’s crude processing capacity to nearly 20 million tons annually, or 400,000 bpd, said one of the sources.
Sinochem acquired the troubled Shandong refineries in a Beijing-orchestrated merger in 2021 with their previous operator, state-owned ChemChina.
Sources said Sinochem is in discussions with two separate Shandong private refiners to potentially offload the other two bankrupt plants, Huaxing Petrochemical and Zhenghe Petrochemical.
($1 = 7.2362 Chinese yuan renminbi)
(Reporting by Chen Aizhu; Editing by Tony Munroe and Jan Harvey)
