China has given the go-ahead to plans for a huge $20-billion refinery and petrochemical complex in the Shandong province, the home of the country’s independent refiners, Reuters reported on Tuesday, citing two industry sources familiar with the approval process.The mega petrochemical complex has been years in the planning, but now it looks like the world’s top oil importer is looking to spend money on oil infrastructure in order to reinvigorate the economy hit by the coronavirus.
China’s National Development & Reform Commission (NDRC) approved the Shandong Yulong Petrochemical project on Monday, Reuters’ sources said.
The complex in the Shandong province – where most of China’s independent refiners, the so-called teapots, are based – is expected to host now the mega project which analysts expect to become operational at some point at the end of 2024. Shandong Yulong Petrochemical will have an oil refinery with a capacity to process 400,000 barrels per day (bpd) and an ethylene plant producing 3 million tons per year. According to Reuters’ sources, the investment in the project will be some US$19.7 billion (140 billion Chinese yuan).
Some independent refiners in Shandong have struggled in recent months after huge refineries such as Hengli Petrochemical and Zhejiang Petrochemical began operations last year.
The Shandong Yulong Petrochemical project, while helping China’s petrochemicals industry by reducing imports, could exacerbate the glut of refined petroleum products in the country, according to Reuters.
Meanwhile, China’s crude oil imports are set to increase by 2 percent in 2020, despite COVID-19, thanks to the low oil prices, according to a research think-tank affiliated with state oil giant China National Petroleum Corporation (CNPC).
Last month, China’s National People’s Congress (NPC), the most important policy-setting annual event in the Communist country, didn’t set an annual target for economic growth because of “great uncertainty” of the recovery from the coronavirus.