rongsheng refinery start price

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, Aug 14 (Reuters) - Rongsheng Petrochemical , the listed arm of a major shareholder in one of China’s biggest private oil refineries, expects demand for energy and chemical products to return to normal in the country in the second half of this year.

Rongsheng expects to start trial operations of the second phase of the refining project, adding another 400,000 bpd of refining capacity and 1.4 million tonnes of ethylene production capacity in the fourth quarter of 2020.

“We expect the effects of the coronavirus pandemic on energy and chemicals to have basically faded in spite of the possibility of new waves of outbreak,” said Quan Weiying, board secretary of Rongsheng, in response to Reuters questions in an online briefing.

But Li Shuirong, president of Rongsheng, told the briefing that it was still in the process of applying for an export quota and would adjust production based on market demand. (Reporting by Muyu Xu and Chen Aizhu; Editing by Jacqueline Wong)

China"s private refiner Zhejiang Petroleum & Chemical is set to start trial runs at its second 200,000 b/d crude distillation unit at the 400,000 b/d phase 2 refinery by the end of March, a source with close knowledge about the matter told S&P Global Platts March 9.

ZPC cracked 23 million mt of crude in 2020, according the the source. Platts data showed that the utilization rate of its phase 1 refinery hit as high as 130% in a few months last year.

Started construction in the second half of 2019, units of the Yuan 82.9 billion ($12.74 billion) phase 2 refinery almost mirror those in phase 1, which has two CDUs of 200,000 b/d each. But phase 1 has one 1.4 million mt/year ethylene unit while phase 2 plans to double the capacity with two ethylene units.

With the entire phase 2 project online, ZPC expects to lift its combined petrochemicals product yield to 71% from 65% for the phase 1 refinery, according to the source.

Zhejiang Petroleum, a joint venture between ZPC"s parent company Rongsheng Petrochemical and Zhejiang Energy Group, planned to build 700 gas stations in Zhejiang province by end-2022 as domestic retail outlets of ZPC.

Established in 2015, ZPC is a JV between textile companies Rongsheng Petrochemical, which owns 51%, Tongkun Group, at 20%, as well as chemicals company Juhua Group, also 20%. The rest 9% stake was reported to have transferred to Saudi Aramco from the Zhejiang provincial government. But there has been no update since the agreement was signed in October 2018.

2021 marked the start of the central government’s latest effort to consolidate and tighten supervision over the refining sector and to cap China’s overall refining capacity.[14] Besides imposing a hefty tax on imports of blending fuels, Beijing has instituted stricter tax and environmental enforcement[15] measures including: performing refinery audits and inspections;[16] conducting investigations of alleged irregular activities such as tax evasion and illegal resale of crude oil imports;[17] and imposing tighter quotas for oil product exports as China’s decarbonization efforts advance.[18]

Yet, of the three most recent major additions to China’s greenfield refinery landscape, none are in Shandong province, home to a little over half the country’s independent refining capacity. Hengli’s Changxing integrated petrochemical complex is situated in Liaoning, Zhejiang’s (ZPC) Zhoushan facility in Zhejiang, and Shenghong’s Lianyungang plant in Jiangsu.[21]

As China’s independent oil refining hub, Shandong is the bellwether for the rationalization of the country’s refinery sector. Over the years, Shandong’s teapots benefited from favorable policies such as access to cheap land and support from a local government that grew reliant on the industry for jobs and contributions to economic growth.[22] For this reason, Shandong officials had resisted strictly implementing Beijing’s directives to cull teapot refiners and turned a blind eye to practices that ensured their survival.

But with the start-up of advanced liquids-to-chemicals complexes in neighboring provinces, Shandong’s competitiveness has diminished.[23] And with pressure mounting to find new drivers for the provincial economy, Shandong officials have put in play a plan aimed at shuttering smaller capacity plants and thus clearing the way for a large-scale private sector-led refining and petrochemical complex on Yulong Island, whose construction is well underway.[24] They have also been developing compensation and worker relocation packages to cushion the impact of planned plant closures, while obtaining letters of guarantee from independent refiners pledging that they will neither resell their crude import quotas nor try to purchase such allocations.[25]

In 2016, during the period of frenzied post-licensing crude oil importing by Chinese independents, Saudi Arabia began targeting teapots on the spot market, as did Kuwait. Iran also joined the fray, with the National Iranian Oil Company (NIOC) operating through an independent trader Trafigura to sell cargoes to Chinese independents.[27] Since then, the coming online of major new greenfield refineries such as Rongsheng ZPC and Hengli Changxing, and Shenghong, which are designed to operate using medium-sour crude, have led Middle East producers to pursue long-term supply contracts with private Chinese refiners. In 2021, the combined share of crude shipments from Saudi Arabia, UAE, Oman, and Kuwait to China’s independent refiners accounted for 32.5%, an increase of more than 8% over the previous year.[28] This is a trend that Beijing seems intent on supporting, as some bigger, more sophisticated private refiners whose business strategy aligns with President Xi’s vision have started to receive tax benefits or permissions to import larger volumes of crude directly from major producers such as Saudi Arabia.[29]

The shift in Saudi Aramco’s market strategy to focus on customer diversification has paid off in the form of valuable supply relationships with Chinese independents. And Aramco’s efforts to expand its presence in the Chinese refining market and lock in demand have dovetailed neatly with the development of China’s new greenfield refineries.[30] Over the past several years, Aramco has collaborated with both state-owned and independent refiners to develop integrated liquids-to-chemicals complexes in China. In 2018, following on the heels of an oil supply agreement, Aramco purchased a 9% stake in ZPC’s Zhoushan integrated refinery. In March of this year, Saudi Aramco and its joint venture partners, NORINCO Group and Panjin Sincen, made a final investment decision (FID) to develop a major liquids-to-chemicals facility in northeast China.[31] Also in March, Aramco and state-owned Sinopec agreed to conduct a feasibility study aimed at assessing capacity expansion of the Fujian Refining and Petrochemical Co. Ltd.’s integrated refining and chemical production complex.[32]

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 400,000 barrels-per-day oil refinery will be accompanied by two ethylene plants. It will also include an oleflex propane dehydrogenation unit, which is expected to produce 600,000t of polymer-grade propylene.

The integrated refinery and petrochemical project is expected to produce more than 20 petrochemical products such as gasoline, diesel, jet coal, paraxylene, high-end polyolefin, and polycarbonate. Aromatics for plastic resins, films, and fibers will be produced in the first phase, using Honeywell"s UOP technology.

The refinery will utilize three UOP Unicracking process units to convert vacuum gas oil and distillate into petrochemical feedstock. The phase will also include production facilities for aromatics and blend stocks along with normal butane.

In the United States, refining capacity has decreased by about 1.1 million b/d since the start of 2020, contributing 184,000 b/d to the global decline in 2021. Global demand for refined products dropped substantially in 2020 as a result of the COVID-19 pandemic.

Less petroleum demand and the associated lower petroleum product prices encouraged refinery closures, reducing global refining capacity, particularly in the United States, Europe, and Japan. However, the US Energy Information Administration (EIA) notes that a number of new refinery projects are set to come online during 2022 and 2023, increasing capacity.

As global demand for petroleum products returned closer to pre-pandemic levels through 2021 and early 2022, the loss of refinery capacity contributed to higher crack spreads—the difference between the price of a barrel of crude oil and the wholesale price of petroleum products—which serve as one indicator of the profitability of refining.

Constraints on global refinery capacity have been contributing to higher crack spreads in the first half of 2022, and they are likely to continue contributing to high crack spreads through at least the end of this year.

In its June 2022 Oil Market Report, the IEA expects net global refining capacity to expand by 1.0 million b/d in 2022 and by an additional 1.6 million b/d in 2023. New refining capacity growth includes several high-profile, high-capacity refinery projects underway, particularly in China and the Middle East, which could add more than 4.0 million b/d of new capacity over the next two years.

The most global refining capacity under development is in China. Chinese capacity is scheduled to increase significantly this year because of the start of at least two new refinery projects and a major refinery expansion.

The first new refinery is the private Shenghong Petrochemical facility in Lianyungang, which has an estimated capacity of 320,000 b/d and reported trial crude oil-processing operations beginning in May 2022.

The second new refinery is PetroChina’s 400,000 b/d Jieyang refinery, in the southern Guangdong province, which is expected to come online in the third quarter of 2022 (3Q22). A planned 400,000 b/d Phase II capacity expansion also began operations earlier in 2022 at Zhejiang Petrochemical Corporation’s (ZPC) Rongsheng facility.

Most noteworthy among these additional expansions are the 300,000 b/d Huajin and the 400,000 b/d Yulong refinery projects, which both have target start dates in 2024.

Outside of China, the 300,000 b/d Malaysian Pengerang refinery restarted in May 2022 after a fire forced the refinery to shut down in March 2020. The refinery’s return is likely to decrease petroleum product prices and increase supply, particularly in south and southeast Asian markets.

Substantial refinery capacity was also added in the Middle East during the past year. The 400,000 b/d Jizan refinery in Saudi Arabia reportedly came online in late 2021 and began exporting petroleum products earlier this year.

More recently, the 615,000 b/d Al Zour refinery in Kuwait—the largest in the country when it becomes fully operational—began initial operations earlier this year and the facility’s operators expect to increase production through the end of 2022.

A new 140,000 b/d refinery is scheduled to come online in Karbala, Iraq, this September, targeting to be fully operational by 2023. A new 230,000 b/d refinery operated by a joint venture between state-owned-firms OQ (of Oman) and Kuwait Petroleum International is set to come online in Duqm, Oman, likely in early 2023.

The 650,000 b/d Dangote Industries refinery in Lagos, Nigeria, set to be the largest in the country when completed, may come online in late 2022 or 2023. The refinery would most likely meet Nigeria’s domestic petroleum product demand as well as demand in nearby African countries, and it would also reduce demand for gasoline and diesel imports into the region from Europe or the United States.

In Mexico, state-owned refiner Pemex has been building a 340,000 b/d refinery in Dos Bocas, which hosted an inauguration ceremony on 1 July, even though the refinery is still under construction and is unlikely to begin producing fuels until at least 2023.

TotalEnergies is planning to restart its 222,000 b/d Donges refinery along the Atlantic Coast of France in May 2022, after closing the facility in late 2020, and some reports indicate the facility has begun importing crude oil for processing.

In addition to major new refinery projects, other facilities are also moving forward with capacity expansions at existing refineries—particularly in India. HPCL’s Visakha Refinery is undergoing a major expansion, estimated at 135,000 b/d, which is scheduled to come online by 2023. A number of other similar expansions are underway in India that may come into effect in 2024 or later.

Although no projects to build new refineries in the United States are currently planned, major refinery expansions are underway at a handful of Gulf Coast refineries, most notably ExxonMobil’s Beaumont, Texas refinery, which plans to increase its capacity by 250,000 b/d by 2023.

If the projects mentioned above were to come online according to their present timelines, global refinery capacity would increase by 2.3 million b/d in 2022 and by 2.1 million b/d in 2023.

EIA cautions that the estimate is not necessarily a complete list of ongoing refinery capacity expansions. Moreover, many of these projects have also already been subject to major delays, and the possibility of partial starts or continued delays related to logistics, construction, labor, finances, political complications, or other factors may cause these projects to come online later than currently estimated.

Saudi Aramco today signed three Memoranda of Understanding (MoUs) aimed at expanding its downstream presence in the Zhejiang province, one of the most developed regions in China. The company aims to acquire a 9% stake in Zhejiang Petrochemical’s 800,000 barrels per day integrated refinery and petrochemical complex, located in the city of Zhoushan.

The first agreement was signed with the Zhoushan government to acquire its 9% stake in the project. The second agreement was signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, who are the other shareholders of Zhejiang Petrochemical. Saudi Aramco’s involvement in the project will come with a long-term crude supply agreement and the ability to utilize Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region.

Phase I of the project will include a newly built 400,000 barrels per day refinery with a 1.4 mmtpa ethylene cracker unit, and a 5.2 mmtpa Aromatics unit. Phase II will see a 400,000 barrels per day refinery expansion, which will include deeper chemical integration than Phase I.

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.

ZHOUSHAN, China/SINGAPORE (Reuters) - State oil giant Saudi Aramco signed an agreement on Thursday to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.

The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.

Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of this year.

Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000-bpd refinery with China"s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.