China's private-sector Risun Petrochemical is pushing ahead with plans for a new 300,000 b/d integrated refinery project that would further boost the country's demand for Saudi crude, despite delays and uncertainty over the involvement of state-controlled Sinochem.
Risun is still waiting for top planning body the NDRC to give final approval for the project at Tangshan in Hebei province, near Beijing. The company originally targeted a 2020 start-up, but the refinery now looks unlikely to come on line until 2024 at the earliest, given construction will take around three years.
The Hebei government included Risun's plant on its list of key oil and petrochemical projects last year, indicating continued support for the plans. Risun has already completed land reclamation work, but changes to the refinery's configurations — including the expansion of its naphtha cracker to 1.5mn t/yr from 1.2mn t/yr originally — may have added to delays in the approval process.
Final environmental approval was obtained last year and the company is hoping to get the greenlight from the NDRC to start construction this year. The 57.8bn yuan ($9bn) project will take mainly Saudi crude in its 300,000 b/d first phase. It will produce 90,000 b/d (4.3mn t/yr) of gasoline, diesel and jet fuel meeting the China 6 tailpipe emissions standards, as well as 3.5mn t/yr of paraxylene, 1.5mn t/yr of ethylene, 1.1mn t/yr of benzene, 700,000 t/yr of toluene and other petrochemical products.
Risun, which listed in Hong Kong in 2019, has been in talks with state-controlled Sinochem to invest in the refinery. But negotiations have so far centred on an oil terminal with a 2mn bl very large crude carrier berth and a 6.3mn bl crude storage farm that Risun is building to serve the refinery.
Sinochem is unwilling to invest in too many refinery projects and may choose to prioritise the planned expansion of its own 240,000 b/d Quanzhou refinery in Fujian province, where it is considering adding 400,000 b/d of refining capacity, 2.4mn t/yr of ethylene and up to 3mn t/yr of paraxylene. The Quanzhou expansion plan has yet to obtain regulatory approvals and may be subject to changes.
Sinochem has added a 70,000 b/d condensate splitter and 1mn t/yr ethylene plant at the Quanzhou refinery over the past year and started on-specification production at a 800,000 t/yr paraxylene unit this month.
Any decision by Sinochem not to take part in the Risun refinery could raise questions over project financing. Risun raised HK$1.68bn ($220mn) from its initial public offering, but the proceeds went mainly to debt servicing and developing its coke and refined chemical businesses.
Downstream competition
But if the project does go ahead it would provide another source of competition for China's independent refiners, which are clustered in Shandong province just south of Hebei. Shandong independents are already facing extra pressure after two large new private-sector plants — Hengli Petrochemical's 400,000 b/d Dalian and Rongsheng's 800,000 b/d ZPC refineries — came on stream over the last two years. Another new private-sector refinery, Jiangsu Shenghong's 320,000 b/d plant, is due to start operations later this year.
The start-up of Risun's project would take to 1.7mn b/d the amount of refining capacity additions scheduled to come on stream in China by 2025, according to Argus estimates.
