rongsheng new refinery 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.

ZPC has the widest flexibility on both crude slate and product slate as the newest integrated complex in China, which enables it to adjust production plans promptly in line with market changes, he said.

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.

MOSCOW (MRC) -- With its name change from Total to TotalEnergies amid its transition from fossil fuels, the major oil company is investing more in renewables and energy storage while decreasing emissions from its natural gas business, reported S&P Globalwith reference to CEO Patrick Pouyanne"s statement Oct. 14.

"We want to decarbonize energy, so we need to invest largely in renewables and decarbonized energy," he said, adding that TotalEnergies plans to invest 75% of its capital expenditures in hydrocarbons and 25% in renewables and electricity, "which is quite new."

"We are building today a multi-energy company with oil and gas, but also renewables and electricity, and tomorrow hydrogen and other technologies," Pouyanne said.

And while it is better from a climate perspective to generate power from gas instead of coal, the challenge for gas usage is reducing methane emissions, he said. Gas-fired power plants are controllable assets that can ramp up and down, which helps deal with renewable energy intermittency, and although batteries can help, long-duration energy storage remains a difficult challenge, Pouyanne said.

TotalEnergies is a broad energy company that produces and markets energies on a global scale: oil and biofuels, natural gas and green gases, renewables, and electricity. The company rebranded itself from Total to TotalEnergies during Q2 2021. The French firm has announced allocating part of surplus revenues to share buybacks. Its 105,000 employees are committed to energy that is ever more affordable, clean, reliable and accessible to as many people as possible. Active in more than 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.

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Textile giants Rongsheng and Hengli have shaken up China"s cozy, state-dominated oil market this year with the addition of close to 1mn b/d of new crude distillation capacity and vast, integrated downstream complexes. Petrochemical products, rather than conventional road fuels, are the driving force for this new breed of private sector refiner. And more are on their way.

Tom: And today we are discussing the advent of petrochemical refineries in China, refineries that have been built to produce mainly petrochemical feedstocks. Just a bit of background here, these two big new private sector firms, Rongsheng and Hengli, have each opened massive, shiny new 400,000 b/d refineries in China this year. Hengli at Changxing in Northeast Dalian and Rongsheng at Zhoushan in Zhejiang Province on the East coast. For those unfamiliar with Chinese geography, Dalian is up by China"s land border with North Korea and Zhoushan is an island across the Hangzhou Bay from Shanghai. And the opening of these two massive new refineries by chemical companies is shaking up China"s downstream market. But China is a net exporter of the core refinery products, gasoline, diesel, and jet. So, building refineries doesn"t sound like a purely commercial decision. Is it political? What"s behind it? How will it affect the makeup of China"s petrochemical product imports?

Chuck: And clearly, the driver here for Rongsheng and Hengli, who as Tom mentioned, are chemical companies, they are the world"s largest producers of purified terephthalic acid, known as PTA, which is the main precursor to make polyester, polyester for clothing and PET bottles. And each of them were importing massive amounts of paraxylene, paraxylene being the main raw material to make PTA. And paraxylene comes from the refining of oil. And really the alternate value for paraxylene or its precursors would be to blend into gasoline to increase octane. So, when looking to take a step upstream in terms of reverse or vertical integration, they"ve quickly found themselves not just becoming paraxylene producers, but in fact becoming refiners of crude to begin with, which of course, is quite complex and it involves all kinds of co-products and byproducts. And as many know, the refining of oil, the primary driver there, as Tom has mentioned, is to produce motor fuels. So, we"re reversing this where the petrochemicals become the strategic product and we look to optimize or maybe even limit the amount of motor fuels produced.

Chuck: And margins, of course, as well because no one wants to shut down their unit just to accommodate the new Chinese production. And what remains to be seen is global operating rates for these PX units will be reduced to maybe unsustainable levels. And as margins come down, they"ll be down for everyone, but the most efficient suppliers or producers will be the ones that survive. And in the case of Hengli and Rongsheng, low feedstock costs, if you"re driving down the cost of paraxylene, you take the benefit on the polyester side because now you have very competitive or very low-priced feedstock.

Tom: That"s a really interesting point actually. Looking at it from a refining economics point of view, if you were trying to diversify your revenue stream, for example, you probably wouldn"t want to increase your gasoline production. And gasoline margins in Europe are barely breaking even, they"re about $4 a barrel. In China, gasoline crack spreads are actually negative. So, fine, they"re self-sufficient in the paraxylene they need for weaving, but are they just... the refiners themselves, Hengli and Changxing, are they now just soaking up losses from the sales of their transport fuels? I think they may be initially, but they"re not just giving their gasoline away, obviously, these refineries were conceived as viable commercial concerns. Hengli anticipates profits, I think, of around 12 billion Yuan per year from its Changxing refinery giving a payback period on that investment of around five years. And each company, interestingly enough, has a distinct marketing strategy for their transport fuel.

Rongsheng is trying to build itself into a retail brand around Shanghai and the Zhejiang area. And Hengli is trying to muscle into the wholesale market on a national level, so it"s gonna be selling products across China. And in that respect, as we were discussing earlier, in fact, Rongsheng appears to have an advantage because where it"s located on the East Coast of China, that region is net short still of transport fuels, but Hengli in the Northeast, that"s a very competitive refining environment. It"s a latecomer to an already pretty saturated market: PetroChina, a state-owned oil giant, is a huge refiner up in Northeast China with its own oil fields, so a ready-made source of low-cost crude. And it"s also very close to the independent sector refining hub in Shandong Province, which is the largest concentration of refineries in China. So, I think there are definite challenges for them on the road fuel front, even if it sounds like they"re going to be pretty competitively placed further downstream in the paraxylene market.

Tom: Well, that"s one of the peculiarities of the Chinese market. As private sector companies, neither Rongsheng nor Hengli are allowed currently to export transport fuels. That"s a legacy concern of the Chinese government to ensure energy self-sufficiency downstream to make sure there"s adequate supply on the domestic market of those fuels. So, that is a real impediment for them. And when they ramp up production of gasoline, diesel, and jet, they are driving down domestic prices and they are essentially forcing product into the seaborne market produced by other refineries. So, in that respect, the emergence of Hengli in Northeast China on PetroChina"s doorstep has created a huge new sense of competition for PetroChina in particular. And I think certainly when you look at their recent financial data, it"s quite clear that they are struggling to adapt to the new environment in which it"s essentially export or die, because these new, massive refineries are crushing margins inside China.

Chuck: And going back specifically to the Hengli and Rongsheng projects, it"s interesting to note, again, going to an order of magnitude or perspective, Hengli is producing or has capacity to produce 4.5 million tons of paraxylene. And in phase one, Rongsheng will have capacity to produce 4 million tons. And I know those are just large numbers, but again, bear in mind that last year, global demand was 43.5 million. So, effectively, these two plants, they could account for 20% of global demand. Just these two projects themselves to give you an idea of just how massive they are and how impactful they can be. Impactful or disruptive, it remains to be seen.

Tom: A sign it doesn"t do things by halves. Although that said, one of the interesting things they have done is essentially halved their transport fuel yields. So, where in a conventional refinery, your combined output of gasoline, diesel, and jet, those core products, might be in the region of 80%, when you look at these new refineries, they"ve really cut that back down to 40% or 50%. And there are new petrochemical refineries springing up, and it"ll be very interesting to see how disruptive those are to the petrochemical market. But in the conventional refining market, they are, I think under pressure to do even more to reduce their exposure to already weakened gasoline and diesel markets. I mean, Shenghong — this new textile company who"s starting up another massive new conventional refinery designed to produce petrochemical products in 2021, I think — they"ve managed to reduce that combined yield to around 30%. They"ve reduced that from an original blueprint.

Chuck: It"s remarkable, but just a note of caution, there have been other petrochemical and refinery projects built recently in Saudi Arabia and in Malaysia, in particular, with established engineering and established chemical and refining companies. And they"ve had trouble meeting the targeted dates for startup and it"s one thing to be mechanically complete, it"s another thing to be operationally complete. But both Hengli and Rongsheng have amazed me at how fast they were able to complete these projects. And by all reports so far, they are producing very, very effectively, but it does remain to be seen why these particular projects are able to run whereas the Aramco projects in Malaysia and in Rabigh in Saudi Arabia have had much greater problems.

Tom: It sounds like in terms of their paraxylene production, they are going to be among the most competitive in the world. They have these strategies to cope with oversupplied markets and refined fuels, but there is certainly an element of political support which has enabled them to get ahead of the pack, I guess. And suddenly in China, Prime Minister Li Keqiang visited the Hengli plant shortly after it came on stream in July, and Zhejiang, the local government there is a staunch backer of Rongsheng"s project. And Zhoushan is the site of a national government initiative creating oil trading and logistics hub. Beijing wants Zhoushan to overtake Singapore as a bunkering location and it"s one of the INE crude futures exchanges, registered storage location. So, both of these locations in China do enjoy a lot of political support, and there are benefits to that which I think do allow them to whittle down the lead times for these mega projects.

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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.

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.

High-capacity refineries require access to reliable sources of crude oil inputs to maintain higher utilization and to a sufficiently large pool of potential customers to supply. Many of these new refineries are located in coastal areas and have easy access to export refined products that are not consumed domestically.

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.

Although these projects are the most imminent new capacity expansions in China, the country is expected to continue increasing its refining and petrochemical processing capacity through a number of additional projects expected to come online by 2030.

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.

More than 2 million b/d of new refining capacity construction is expected to come online to support markets in the Indian Ocean basin in 2022. At the same time, a handful of major projects are also planned in the Atlantic basin.

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.

China currently has at leastfour major new refineriesunder construction, most of which are expected to produce plastic feedstocks, such as ethylene and propylene.

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.

The fact that this landmark refinery joint venture is back under serious consideration underlines the extremely significant shift in Saudi Arabia’s geopolitical alliances in the past few years – principally away from the U.S. and its allies and towards China and its allies. Up until the 2014-2016 Oil Price War, intended by Saudi Arabia to destroy the then-nascent U.S. shale oil sector, the foundation of U.S.-Saudi relations had been the deal struck on 14 February 1945 between the then-U.S. President Franklin D. Roosevelt and the Saudi King Abdulaziz. In essence, but analyzed in-depth inmy new book on the global oil markets,this was that the U.S. would receive all of the oil supplies it needed for as long as Saudi had oil in place, in return for which the U.S. would guarantee the security both of the ruling House of Saud and, by extension, of Saudi Arabia.

Concomitant with this weakening of relations between Saudi Arabia and the U.S. came a drift towards Russia first and then China. Given the reputational damage done to the perceived power of Saudi Arabia and its OPEC brothers by their inability to destroy or disable the growing threat from U.S. shale oil to their former dominance in the global oil markets, their attempts to pull oil prices back up to levels at which they could begin to repair thedamage done to their economiesby the 2014-2016 Oil Price War towards the end of 2016 also failed. At that point, fully cognisant of the enormous economic and geopolitical possibilities that were available to it by becoming a core participant in the crude oil supply/demand/pricing matrix, Russia agreed to support the OPEC production cut deal in what was to be called from then-on ‘OPEC+’, albeit in its own uniquely self-serving and ruthless fashion, again analyzed in-depth inmy new book on the global oil markets.

Later, the first discussions about the joint Saudi-China refining and petrochemical complex in China’s northeast began, with a bonus for Saudi Arabia being that Aramco was intended to supply up to 70 percent of the crude feedstock for the complex that was to have commenced operation in 2024. This, in turn, was part of a multiple-deal series that also included three preliminary agreements to invest in Zhejiang province in eastern China. The first agreement was signed to acquire a 9 percent stake in the greenfield Zhejiang Petrochemical project, the second was a crude oil supply deal signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, and the third was with Zhejiang Energy to build a large-scale retail fuel network over five years in Zhejiang province.

This latest Aramco-Norinco-Panjin Sincen deal, though, carries with it even broader ramifications of a much more overtly testing nature for U.S. President Joe Biden in terms of where he draws the line on supposed allies blurring trade considerations and security considerations. All Chinese companies function as part of the State apparatus – without any exception – and Norinco has the added troubling element for the U.S. that it is one of China’s major defense contractors, specializing in the full range of research, development, and production of military equipment, technology, systems, and weapons. This runs alongside ongoing concerns from Washington about Saudi Arabia’s on again-off again agreement with Russia tobuy its S-400 missile defense system, and much more recent news in December 2021 that Saudi Arabia is now actively manufacturing itsown ballistic missiles with the help of China.

The Zhoushan petrochemical complex is being developed in one of seven new large industrial sites being developed in Zhoushan Island. The sites are being developed as part of the Chinese government’s national economic development plan.

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.

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.

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.