Work has begun on a $21bn refinery and petrochemical complex in Shandong province in northeast China. When complete in 2024, the Yulong plant will be able to process 400,000 barrels of crude oil a day and produce 3 million tonnes of ethylene a year.
The decision to build the complex was taken in June this year by the National Development and Reform Commission, China’s top economic planning agency. Reuters commented that the project had been proposed some years ago, but was delayed by the country’s overcapacity in petrochemical products.
The decision to press ahead was part of wider moves to boost demand, and partly to anticipate future growth in demand for refining.
Most of China’s oil comes from the Middle East, and the refinery will be designed to handle light crude from Saudi Arabia and Kuwait.
The cost of the project is greater than would normally be the case for a medium-sized refinery because of the need to replace a number of smaller and less efficient plants in Shandong. Some $3bn has been allocated to fund these closures.
The lead investor in the scheme will be Nanshan Group, a conglomerate with operations in aluminium smelting, textiles and industrial park development. It is based in Yantai, a port city in the northeast of the province. Other funders will be chemical group Wanhua and the government of Shandong.
The Yulong project was one of some 500 industrial projects begun in the province of Shandong over the past week, Chinese media reported. The total investment in those projects is estimated at $81bn.
Image: The refinery will be built in Yantai, a hub of China’s refining and petrochemical industries (HaoLinFotos/CC BY-SA 4.0)