Argus Media Limited

10/26/2021 | News release | Distributed by Public on 10/26/2021 05:39

China caps refinery capacity under peak emissions plan

China will cap primary crude processing capacity at 20mn b/d by 2025, the government said in a new action plan to achieve peak emissions by 2030.

The plan, published by the state council today, gives a more detailed sector-by-sector breakdown following the release of an economy-wide plan for peak emissions and carbon neutrality on 24 October.

Major refining units should raise their utilisation rate to more than 80pc, the state council said, without giving any further details.

China's operational crude distillation unit (CDU) capacity was 17.8mn b/d at the end of 2020, according to state-controlled oil firm Sinopec's research unit EDRI.

A total of 1.88mn b/d of new refining capacity and expansions are scheduled to come on line over 2021-25, according to Argus' calculations. This would take total capacity to around 19.7mn b/d, if all the units come on line as planned.

Capacity additions include the private-sector 320,000 b/d Lianyungang refinery and state-controlled PetroChina's 400,000 b/d Jieyang plant, which are scheduled to start up in 2021-22. Sinopec and fellow state-owned firm CNOOC are planning to expand their Zhenhai and Daxie refineries respectively by 2024, while Yulong, a 400,000 b/d refining complex backed by the Shandong government, could start up around 2024-25.

The state council also called for outdated petrochemical units to be phased out to help solve the problem of excess capacity. Stricter approvals should be put in place to control refinery expansions, it said.

The outright capacity cap comes after top economic planner the NDRC last week said China would continue to shut refineries smaller than 2mn t/yr (40,000 b/d) and ban new refineries with less than 10mn t/yr or 200,000 b/d of CDU capacity in 2021-25 period. The targets are part of a separate action plan to curb emissions and energy use in key emissions-intensive sectors.

New refineries will only be approved on the condition that operators commit to phasing out a greater amount of existing capacity, the NDRC said.

Road transportation demand for petroleum products should peak before 2030, the state council said today.

China's planned refinery expansions, 2021-25 000 b/d
Refinery Operator Net expansion Year
Luoyang Sinopec 40 2021
Lianyungang Shenghong Petrochemical 320 2021
Zhenhai phase 1 Sinopec 80 2021
Jieyang PetroChina 400 2022
Daxie CNOOC 120 2024
Yulong Nanshan,Wanhua 400 2024
Panjin Norinco 300 2024
Zhenhai phase 2 Sinopec 220 2024
Total 1,880