Chinese Agency Issues Regulations Restricting the Start of New Oil Refining Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--China Petroleum and Chemical Industry Association recently issued a document titled "Guidelines for Structural Adjustment in Petroleum and Chemical Industry," which restricts the start of new oil-refining projects.

The document states that no more new refining projects will be approved in areas where oil-refining capacity is in relative excess and that approval of new refining projects also will be strictly limited in areas where refined oil consumption is intensive.

According to the guidelines, China will have a dozen 425,000-barrel-per-day (BBL/d) refineries by 2015, and the average scale of China's oil refining companies will exceed 100,000 BBL/d. Oil-refining facilities that have a capacity less than 21,000 BBL/d will be phased out, while facilities that have a capacity about 40,000 BBL/d will be transformed and start producing special products. Also, constructing small-scale refineries in the name of producing asphaltum or heavy oil will be forbidden.

The Association made it clear that the guidelines were intended to better implement the "Petrochemical Industry Reinvigoration Plan." The plan was published by Chinese State Council in May 2009 and is intended to cushion the impact of the financial crisis on China's petrochemical industry and help the industry achieve recovery.

The plan depicts the future geographical distribution of China's refineries. South China presently suffers severe oil shortage, which is dealt with by Chinese government through shipping oil from North China and South China. The plan says this situation will be greatly relieved by 2011. Refineries in the Yangtze River Delta, Pearl River Delta and Bohai Rim Area will be further integrated into three to four industry bases, which produce 425,000 BBL/d of refined oil and 2 million tons of ethylene per year.

The plan points out that the three years between 2009 and 2011 is an adjustment and transformation period for China's petrochemical industry. The Plan says by 2011, China will be able to process 865,000 BBL/d of crude oil, and produce 530,000 BBL/d of refined oil and 1.55 million tons of ethylene per year.

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