The Chinese province, which is a major oil hub in the country, plans to shut down 500K b/d in refining capacity among 60 independently-owned refineries (teapots). Even though fuel demand is expected to be lower demand for fuel in the near term, the move to shut down 20% of Shandong's refining capacity, which was planned since 2018, was accelerated in order to accommodate the $20B Yulong Petrochemical complex in Yantai. The facility, which consists of a 400K-b/d refinery and 3MM mt/y ethylene plant, received approval in the week ending June 5. According to Senior Analyst Wang Zhao of consultancy Sublime Information Group, teapots with capacity less than 60K b/d, especially facilities with financial losses, will be the first to close. The first closures will likely include Binyang Ranhua, Jinshi Asphalt, Yuhuang Chemical, and Zhonghai Jingxi Chemical, which have a combined 200K b/d in crude distillation capacity.
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