rongsheng new refinery quotation

The issuance of new 2022 quotas with just over two months of the year left suggests the two refiners may ramp up imports to fully use up their quotas before the deadline.

With the new issue, ZPC, China"s largest refiner with 800,000 barrels per day crude processing capacity, has obtained 40 million tonnes of quotas for the year, fully matching its refining capacity.

In a move to encourage higher refinery production to help a struggling economy, authorities earlier this month issued a small portion of the first-batch crude oil import quotas for 2023, months ahead of the usual timeline.

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)

Miserable Chinese refinery margins will constrain runs among integrated refineries, incl major firms like Hengli & Rongsheng, whose profits fell by 90% y/y in Q3 22.expects low margins to persist into Q2 2023 -> cautious crude purchases.

Privately owned unaffiliated refineries, known as “teapots,”[3] mainly clustered in Shandong province, have been at the center of Beijing’s longtime struggle to rein in surplus refining capacity and, more recently, to cut carbon emissions. A year ago, Beijing launched its latest attempt to shutter outdated and inefficient teapots — an effort that coincides with the emergence of a new generation of independent players that are building and operating fully integrated mega-petrochemical complexes.[4]

The changing roles played by China’s independent refineries are reflected in their relations with Middle East suppliers. In the battle to ensure their profitability and very survival, smaller Chinese teapots have adopted various measures, including sopping up steeply discounted oil from Iran. Meanwhile, Middle East suppliers, notably Saudi Aramco, are seeking to lock in Chinese crude demand while pursuing new opportunities for further investments in integrated downstream projects led by both private and state-owned companies.

Four years later, the NDRC adopted a different approach, awarding licenses and quotas to teapot refiners to import crude oil and granting approval to export refined products in exchange for reducing excess capacity, either upgrading or removing outdated facilities, and building oil storage facilities.[10] But this partial liberalization of the refining sector did not go exactly according to plan. Swelling with new sources of feedstock that catapulted China into the position of the world’s largest oil importer, teapots increased their production of refined fuels and, benefiting from greater processing flexibility and low labor costs undercut larger state rivals and doubled their market share.[11]

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]

Last October, Beijing reduced crude oil import quotas awarded to small independent refineries for the first time since they were allowed into the market while raising them for larger, more efficient private plants. Among the primary beneficiaries of these new allocations are a new generation of provincial-backed independent players long interested in expanding into the oil refining business.[19]

The politics surrounding this new class of greenfield mega-refineries is important, as is their geographical distribution. Beijing’s reform strategy is focused on reducing the country’s petrochemical imports and growing its high value-added chemical business while capping crude processing capacity. The push by Beijing in this direction has been conducive to the development of privately-led mega refining and petrochemical projects, which local officials have welcomed and staunchly supported.[20]

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]

Commenting on the rationale for these undertakings, Mohammed Al Qahtani, Aramco’s Senior Vice-President of Downstream, stated: “China is a cornerstone of our downstream expansion strategy in Asia and an increasingly significant driver of global chemical demand.”[33] But what Al Qahtani did notsay is that the ties forged between Aramco and Chinese leading teapots (e.g., Shandong Chambroad Petrochemicals) and new liquids-to-chemicals complexes have been instrumental in Saudi Arabia regaining its position as China’s top crude oil supplier in the battle for market share with Russia.[34] Just a few short years ago, independents’ crude purchases had helped Russia gain market share at the expense of Saudi Arabia, accelerating the two exporters’ diverging fortunes in China. In fact, between 2010 and 2015, independent refiners’ imports of Eastern Siberia Pacific Ocean (ESPO) blend accounted for 92% of the growth in Russian crude deliveries to China.[35] But since then, China’s new generation of independents have played a significant role in Saudi Arabia clawing back market share and, with Beijing’s assent, have fortified their supply relationship with the Kingdom.

State oil giant Saudi Aramco plans to ink an agreement later on Thursday to take a stake in a refinery-petrochemical project in eastern China, a senior official said on Thursday.

"We will have a signing ceremony later today with the Zhejiang government to invest in the Zhejiang refinery-petrochemical project," Aramco"s Senior Vice President of Downstream, Abdulaziz al-Judaimi told an industry event.

Zhejiang Petrochemical, 51 percent owned by textile giant Rongsheng Holding Group, plans to start its 400,000-barrels-per-day refinery-petrochemical project in eastern China in late 2018.

China"s demand for crude is on the rise because of new refining capacity that is being added in the country and this is favorable for VLCCs" freight rates though part of it will be offset by increased supply of ships, shipping industry executives said.

Hengli Petchem and Zhejiang Rongsheng"s new 400,000 bpd refinery each in Dalian and Zhoushan, respectively, are expected to come on stream in the last quarter of this year. In the same quarter, CNPC"s 100,000 bpd and Sinopec"s 200,000 bpd incremental capacity in Huabei and Zhanjiang, respectively, are also expected to become operational, they said.

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.

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MOSCOW (MRC) -- Together with partners, Covestro is investigating how recycling polyurethane plastics can be significantly improved. The materials manufacturer is part of the new Europe-wide research project called "PUReSmart", which comprises nine companies and academic institutions from six countries, as per the company"s press release.

PUReSmart will run for four years and will receive six million euros from the European Union under the Horizon 2020 research and innovation program (grant agreement No. 814543). The project, coordinated by the Belgian company Recticel, aims to recover 90 percent of the used polyurethane in order to create building blocks for existing or new products - for example a new polymer that combines the durability of thermosets with the recyclability of thermoplastics. Intelligent sorting methods are particularly important for efficient chemical recycling.

Covestro is working on the best possible chemical recycling of polyurethanes after use during the project along with the qualitative treatment of the material flows that are generated during this. The aim is to obtain high-quality raw materials for new polyurethane applications. "Polyurethanes are a particularly versatile and widely used class of plastics that provide comfort and safety in many applications worldwide and, as an insulating material, contribute to energy savings and thus to sustainability," says Dr. Nikola Schuck, who heads Covestro"s contributions to PUReSmart. "Now it"s time to increase the sustainable value of the material at the end of its useful life."

In the trade of Iraqi grades, the country"s State Oil Marketing Organization (SOMO) largely clinched term deals for Basrah Medium and Basrah Heavy for January to December 2022 loading. Of these, China"s Rongsheng Petrochemical and Hengli Petrochemical were newly said to have new annual term contracts with SOMO. Both of the refiners purchased Basrah but these purchases were on spot transactions.

In Asia and the Middle East, at least nine refinery projects are beginning operations or are scheduled to come online before the end of 2023. At their current planned capacities, they will add 2.9 million barrels per day (b/d) of global refinery capacity once fully operational.

In the International Energy Agency’s (IEA) 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. Net capacity additions reflect total new capacity minus capacity that has closed.

The scheduled expansions follow a period of reduced global refining capacity. Net global capacity declined in 2021 for the first time in 30 years, according to the IEA. The new refinery projects would increase production of refined products, such as gasoline and diesel, and in turn, they might reduce the current high prices for these products.

China’s refinery capacity is scheduled to increase significantly this year. The Shenghong Petrochemical facility in Lianyungang has an estimated capacity of 320,000 b/d, and they report that trial crude oil-processing operations began in May 2022. In addition, PetroChina’s 400,000 b/d Jieyang refinery is expected to come online in the third quarter of 2022. A planned 400,000 b/d Phase II capacity expansion also began operations earlier this year at Zhejiang Petrochemical Corporation’s (ZPC) Rongsheng facility. More information on these expansions is available in our Country Analysis Executive Summary: China.

Outside of China, the 300,000 b/d Malaysian Pengerang refinery (also known as the RAPID refinery) restarted in May 2022 after a fire forced the refinery to shut down in March 2020. In India, the Visakha Refinery is undergoing a major expansion, scheduled to add 135,000 b/d by 2023.

New projects in the Middle East are also likely to be an important source of new refining capacity. 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. A new 140,000 b/d refinery is scheduled to come online in Karbala, Iraq, this September, targeting fully operational status by 2023. A new 230,000 b/d refinery is set to come online in Duqm, Oman, likely in early 2023.

These estimates do not necessarily include all ongoing refinery capacity expansions. Moreover, many of these projects have 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 estimated. Although the potential for project complications and cancellations is always a significant risk, these projects could otherwise account for an increase of nearly 3.0 million b/d of new refining capacity by the end of 2023.

SINGAPORE- Middle East crude benchmarks Oman and Dubai firmed on Wednesday after Rongsheng Petrochemical snapped up spot cargoes for delivery in December and January in preparation of starting a new crude unit by the end of the year.

Rongsheng, the trading arm of Chinese private refiner Zhejiang Petrochemical, 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.

On Wednesday, Rongsheng was said to have bought another 2 million barrels of Oman crude from Occidental, trade sources said. It may have also purchased 1 million barrels each of Basra Light and Upper Zakum crude from PetroChina, they added. These deals could not be verified.

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.

Viva Energy Group Ltd said it expected its refinery business to make a loss in the third quarter and that it would make a decision on its future in December as the longer-term outlook remains highly uncertain.