rongsheng refinery start up factory

Zhejiang Petroleum & Chemical Co Ltd, one of two new major refineries built in China in 2019, said it has started up the remaining units in the first phase of its refinery and petrochemical complex.

The company, 51% owned by private chemical group Zhejiang Rongsheng Holdings, said it has started test production at ethylene, aromatics and other downstream facilities, without giving further details.

Zhejiang Petrochemical started a first 200,000 barrels per day (bpd) crude processing unit in late May, following on from the start of a 400,000-bpd refinery owned by another private chemical major Hengli Petrochemical.

The newly started units at Zhejiang Petrochemical should include a second 200,000-bpd crude unit, a 1.2 million tonnes per year (tpy) ethylene unit and a 2 million tpy paraxylene unit, according to several industry sources with knowledge of the plant’s operations.

The construction works started recently. The volumes from the additional capacity are expected to be available from the end of 2021 and are dedicated to mainly serve European customers as well as the rapidly growing Asian market.

"We want to meet our customers" growing demand for high-quality, sustainable and high-performance technologies in the best possible way now and in future. To achieve that, we continuously invest in expanding our capacities and production technologies. To this end, we acquired an innovative process approach for producing MSA from Grillo-Werke AG in mid 2019 to strengthen our own R&D activities and to accelerate the development of a new manufacturing process for methane sulfonic acid. In doing so, we support as reliable partner the growth of our customers across the world," said Ralph Schweens, President Care Chemicals, BASF.

As MRC wrote previously, BASF, the world"s petrochemical major, restarted its No. 1 steam cracker on September 30, 2019, following a maintenance turnaorund. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

According toMRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

SINGAPORE, Oct 14 (Reuters) - Rongsheng Petrochemical, the trading arm of Chinese private refiner Zhejiang Petrochemical, has bought at least 5 million barrels of crude for delivery in December and January next year in preparation for starting a new crude unit by year-end, five trade sources said on Wednesday.

Rongsheng bought at least 3.5 million barrels of Upper Zakum crude from the United Arab Emirates and 1.5 million barrels of al-Shaheen crude from Qatar via a tender that closed on Tuesday, the sources said.

Rongsheng’s purchase helped absorbed some of the unsold supplies from last month as the company did not purchase any spot crude in past two months, the sources said.

Zhejiang Petrochemical plans to start trial runs at one of two new crude distillation units (CDUs) in the second phase of its refinery-petrochemical complex in east China’s Zhoushan by the end of this year, a company official told Reuters. Each CDU has a capacity of 200,000 barrels per day (bpd).

Zhejiang Petrochemical started up the first phase of its complex which includes a 400,000-bpd refinery and a 1.2 million tonne-per-year ethylene plant at the end of 2019. (Reporting by Florence Tan and Chen Aizhu, editing by Louise Heavens and Christian Schmollinger)

BEIJING/SINGAPORE (Reuters) - China’s privately-run Zhejiang Petrochemical Corp is expected to start partial test operations at some units around end of this year and early 2019, but a full trial operation is only expected in the second quarter of next year, a company executive said.

“The company is planning to start trial runs at the crude unit and also some downstream units around end of the year and early in 2019,” said the Zhejiang-based executive, who declined to be named as he is not authorized to speak to press.

The company, 51 percent owned by Rongsheng Holdings, is building a 400,000 barrels per day refinery which is integrated with a petrochemical complex led by a 1.2 million-tonne per year ethylene facility.

The refinery, built on an island off the archipelago city of Zhoushan in east China, is configured to process medium sour crudes such as Saudi’s Arab Medium and Oman, as well as Latin American oil.

Saudi Aramco is also expected to supply up to 170,000 bpd of crude to Zhejiang Petrochemical and has signed an initial agreement to take a stake in the company.

Two separate industry sources said Rongsheng has bought a million barrels of Brazilian medium-sweet crude Lula for end-January arrival possibly for use in the test operation.

The optimism comes even as China faces near-term headwinds such as slow travel demand for the upcoming week-long National Day holiday, property debt issues, foreign companies shifting supply chains from the country, slowing goods exports and rising unemployment after a series of city-wide lockdowns over April-May.

"The toughest moment has passed. Restoring consumers" confidence is what the government needs to do and is doing," said Sun Xin, a director with Shenghong Petrochemical International, a trading desk of the greenfield Shenghong Petrochemical refinery complex in Jiangsu province.

"We have seen some green shoots already in China"s economy. Especially in September, we see more congestion in terms of transportation. We see a better run rate at the refineries," said Chen Hongbin, deputy GM of Rongsheng Petrochemical (Singapore).

Rongsheng is a trading arm of the privately-held refining complex Zhejiang Petroleum & Chemical, which restarted its 200,000 b/d No.4 CDU in last week after operations were suspended for seven months, and lifted run rates to around 95% of its nameplate capacity of 800,000 b/d from 83% in August, S&P Global data showed.

Unlike the lockdowns in Q2, Chen said supply chain disruptions in the manufacturing sector were seldom seen under the current zero-COVID measures. He added that opening up was the ultimate aim of China"s COVID policies, but the process was gradual and would take time.

As a result, the panelists said that while manufacturing and infrastructure construction were supporting robust gasoil demand, gasoline and jet fuel consumption would pick up only when the COVID measures eased further and international travel resumed. Oil demand in Q4 was expected to increase from Q3, while growth would be seen in 2023 due to low bases in 2022, they added.

Wu Qiunan, the chief economist of the state-owned PetroChina International, said on the panel that China"s strong EV sales in 2022 also posed a threat to gasoline demand recovery. The PetroChina Planning & Engineering Institute has forecast the EV uptake will result in China"s gasoline demand peaking in 2026.

The panelists said their oil product exports will be economic-driven despite a potential final batch of quota allocations being released for 2022 with a volume of up to 15 million mt or 119 million barrels.

He added that ZPC always takes economics as the most important factor in deciding when and which product to export. The refinery holds 2.36 million mt of gasoline, gasoil and jet fuel export quotas, and was expected to gain a further 600,000 mt in the potential new allocation.

Valid until the end of the year, the new quota includes 1.95 million tonnes allotted to CNPC, 1 million tonnes to privately controlled Zhejiang Petrochemical Corp (ZPC) and 50,000 tonnes to North Industries Group Corp(Norinco), the sources said.

ZPC, which operates China"s single-largest crude oil refinery based in eastern port city Zhoushan, in July became the first private refiner allowed to export refined fuel, but the size of its quota had not been determined.

"The export quotas will offer more flexible choices for the company in the fuel market ... and will allow the company to pursue bigger benefits," Rongsheng said in the statement.

Previously, only a handful of large state-owned Chinese refiners, including Sinopec, CNPC, CNOOC, Sinochem Group and China National Aviation Fuel Co, have been allowed to export refined products.

The allotment to Norinco will go to the group"s subsidiary refinery, Huajin Petrochemical, based in northeast China"s Liaoning province, which aims to use the quota for diesel exports, one of the officials said.

Despite swelling domestic fuel inventories as a result of record refinery processing, Chinese refiners have capped overseas shipments so far this year as the coronavirus pandemic slashed global demand.

As the shift in oil demand from Covid-19 turned the tables of regional levels of fuel production and exports, China succeeded in overtaking the USA as the world’s biggest oil refiner in 2020. As China began to ramp up its refining capacity throughout the pandemic, the US Energy Information Administration (EIA) published data showing thatChina processed more crude oil than the U.S.for much of 2020.

Oil refineries across the U.S. have been losing momentum in response to the Covid-19 pandemic. At the end of last year, Royal Dutch Shell Plc ground production at its Convent refinery in Louisiana to a halt. This same facility had 35 times the refining capacity of China when it opened in 1967, showing how dramatically the tables have turned over the past couple of decades.

Oil refineries have also been impeded this year by the severe storm that hit the state of Texas in February. During the storm, oil refining fell to its lowest levels since 2008. This was largely due to frozen pipelines which forced producers to halt activities.Refinery crude runs fell by 2.6 million bpdthroughout the week to 12.2 million bpd.

Meanwhile, in November, China was processing around1.2 million bpd of crude oil. Much of this new refining work was taking place in the new unit at Rongsheng Petrochemical’s giant Zhejiang facility in northeast China.

China is not the only Asian giant to invest in refining over the next decade. Just a few weeks ago,India announced plan to invest $4.5 billion in a Panipat refinery expansionby September 2024. This would increase Panipat’s capacity by two-thirds to 500,000 bpd.

State-owned Indian Oil Corporation (IOC) has also announced plans to build a new refinery at Nagapattinam in the southern state of Tamil Naduat a cost of $4.01 billion. The IOC subsidiary Chennai Petroleum Corporation Limited is expected to develop the refinery. The project is aimed at meeting the demand of petroleum products across southern India.

While U.S. refining activities are expected to pick up before the end of the year, a dramatically increased oil refining capacity in China, as well as new projects in India, suggest that the face of the industry could change over the next decade. As oil demand wanes in the U.S. and continues to increase across Asia, many Asian countries will be seeking out refined products from closer to home to meet their needs.

Rongsheng Petrochemical Co., Ltd. is a China-based company principally engaged in the research, development, manufacturing and distribution of refining products, petrochemicals and chemical fibers. Rongsheng has an annual production capability of 2 million tons of aromatic hydrocarbon, over 13 million tons of pure terephthalic acid (PTA), 2 million tons of PET, 1 million tons of POY and FDY, 0.45 millon tons of DTY. Rongsheng‘s total capability of PTA ranks the first of the world. Rongsheng persists in “Two-way of Vertical and Horizontal” development strategy and recently developed a green refining-petrochemical integrated project with a total capacity of 40 million tons per annum, via its subsidiary Zhejiang Petroleum and Chemicals Co., Ltd. (ZPC).

While the Saudi Arabian-led efforts to restrain supply amid surging North American shale production have hogged headlines, a sense of malaise is quietly creeping across Asia. With the US-China trade war now almost a year old and showing no signs of ending, its impact is manifesting itself in everything from profit warnings by Japanese car makers to sagging Chinese diesel consumption.

It"s a bleak reality that could confound the Organization of Petroleum Exporting Countries and its partners as they try to figure out how best to balance the market. Geopolitical tension and supply-side disruptions are supporting oil prices for now, but a failure by the group to properly gauge demand for their crude in the biggest markets risks undermining their efforts.

"It feels like demand is very, very weak," said Michal Meidan, head China analyst at Energy Aspects Ltd. "On the supply side, the consensus really was Opec rolling over the supply cuts," so it"s quite surprising that prices haven"t risen further, especially with all the geopolitical stress, she said.

Chinese fuel demand appears weak since the start of the year, the International Energy Agency said in its June report, and Japanese and South Korean oil consumption dropped more-than-expected in March and April, respectively. Vehicle sales in Asia"s largest economy fell 13 per cent in January through May from a year earlier, official data show.

As refiners in South Korea and Taiwan struggle to break even, new plants that were commissioned in better times are starting up. Hengli Petrochemical Co"s. 400,000 barrel a day refinery in Dalian is already at full capacity. Rongsheng Petrochemical Co"s similar-sized plant in Zhoushan, has begun partial operations, while Hengyi Petrochemical Co is set to start a smaller refinery in Brunei in the third quarter.

"The start-up of Rongsheng"s refinery in Zhoushan, near major oil-consuming cities such as Shanghai and Hangzhou, will intensify a price war among coastal refineries hoping to market fuel into urban areas," said Li Li, an analyst at commodities researcher ICIS-China. This will further squeeze the independent refineries and potentially lead to industry consolidation, she said.

The IEA cut its 2019 forecast for worldwide oil demand growth for a second straight month in June, to 1.2 million barrels a day, citing the slowdown in global trade. Wall Street is more pessimistic, with Morgan Stanley seeing an expansion of 1 million barrels a day and JPMorgan Chase & Co projecting 800,000 barrels. While the IEA predicts growth will improve to 1.4 million barrels a day next year, it also sees supply jumping by 2.3 million barrels.

Not everyone is bearish though. Goldman Sachs Group said in a June 17 note that infrastructure spending and interest-rate cuts in response to the trade war were setting the stage for a rally in investment and manufacturing next quarter that would boost commodity prices. Citigroup is more bullish, and forecasts Brent crude may rise to US$75 a barrel - from around US$65 now - over the northern hemisphere summer.

The ratcheting up of tensions between the US and Iran has added another dimension to the situation, complicating Opec+"s rebalancing task. The risk is the group focuses too much on the Persian Gulf and not enough on the negative demand signals coming from Asia and elsewhere.

"The political risks are obviously mainly to the upside," but the fundamental economics for oil are quite bearish, Erik Norland, a senior economist at CME Group, which owns derivatives and futures exchanges, said in a Bloomberg TV interview Monday. "You still have soaring supplies in the US, and you have demand that"s not really keeping pace."

Earlier this month, Royal Dutch Shell pulled the plug on its Convent refinery in Louisiana. Unlike many oil refineries shut in recent years, Convent was far from obsolete: it’s fairly big by US standards and sophisticated enough to turn a wide range of crude oils into high-value fuels. Yet Shell, the world’s third-biggest oil major, wanted to radically reduce refining capacity and couldn’t find a buyer.

Abu Dhabi, UAE – November 12, 2019: The Abu Dhabi National Oil Company (ADNOC) announced, today, it has signed a broad Framework Agreement with China’s Rongsheng Petrochemical Co., Ltd. (Rongsheng) to explore domestic and international growth opportunities which will support the delivery of its 2030 smart growth strategy.

The agreement will see both companies explore opportunities in the sale of refined products from ADNOC to Rongsheng, downstream investment opportunities in both China and the United Arab Emirates, and the supply and delivery of liquified natural gas (LNG) to Rongsheng.

The agreement was signed by His Excellency Dr. Sultan Al Jaber, UAE Minister of State and ADNOC Group CEO, and Li Shuirong, Chairman of Rongsheng Group.

H.E. Dr. Al Jaber said: “This Framework Agreement builds on the existing crude oil supply relationship between ADNOC and Rongsheng, which we are keen to enhance. The agreement covers domestic and international growth opportunities across a range of sectors, which have the potential to open new markets for our growing portfolio of products and attract investment to support our downstream and gas expansion plans.

Under the terms of the Framework Agreement, ADNOC and Rongsheng will explore opportunities for increasing the volume and variety of refined products sales to Rongsheng as well as ADNOC’s active participation as Rongsheng’s strategic partner in refinery and petrochemical opportunities, including an investment in Rongsheng’s downstream complex. In return Rongsheng will also explore potential investments in ADNOC’s downstream industrial ecosystem in Ruwais, including the proposed Gasoline Aromatics Plant (GAP) and the potential for ADNOC to supply and deliver liquified natural gas (LNG) for utilization by Rongsheng within its production complexes in China.

Shuirong said: “This Framework Agreement is a key milestone in Rongsheng Petrochemical’s strategic international expansion. ADNOC is an important trading partner, and we are confident of the win-win benefits of this partnership, particularly in realizing opportunities in the downstream space in Asia.

“The strategic cooperation with ADNOC will ensure that our ZPC project, which will have a refining capacity of up to 1 million barrels per day (mbpd) of crude, has adequate supplies of feedstock. Our valued partnership will enable Rongsheng Petrochemical to continue its expansion into the international oil market and we are confident Rongsheng Petrochemical will achieve enhanced market share and recognition in the global marketplace.”

The framework agreement supports ADNOC’s downstream expansion plans, which will see it create a world scale integrated refining and petrochemicals complex in Ruwais while pursuing integrated margins for its own hydrocarbons with in-market investments.

Rongsheng Petrochemical Co., Ltd. is one of the leading companies in China’s petrochemical and textile industry. In recent years, Rongsheng has been committed to developing both vertically and horizontally across the value chain, investing massively in multiple high-value oil and gas projects. Amongst them, Zhejiang Petroleum & Chemical Co., Ltd. (ZPC), in which Rongsheng has a controlling interest, is a 40 million tons per annum mega integrated refining and chemical project. Once operational, ZPC will be one of the largest-scale plants in the world.

China is the world"s second-largest oil consumer, and Chinese energy companies have steadily increased their participation in ADNOC’s Upstream and Downstream operations. At the same time, ADNOC has identified China as an important growth market for its crude oil and petrochemical products, as it moves towards boosting its oil production capacity to 4 million barrels per day (mbpd) by the end of 2020 and 5mbpd in 2030 and accelerates the implementation of its downstream expansion and international investment strategies.