As ESAI Energy explains, two of China’s new refineries are integrated with petrochemical operations. Hengli Petrochemical and Zhejiang Petrochemical, each with 400 000 bpd of distillation capacity, are configured to produce a total volume of 8.5 million t of para-xylene (PX) with transport fuels as byproducts. The transport fuel component will be more heavily weighted toward gasoline and jet fuel, yet the new refineries will produce only about half the diesel that a typical refinery of the same size would produce. Moreover, ESAI Energy expects supply from the new projects to displace some production of other domestic refineries.
“Competition from the new projects could be the last straw for some independent refiners that are already hit by shrinking demand, rising crude prices, new tax rules, and increasingly stringent environmental measures,” commented ESAI Energy China Analyst Yao Wu. “Added supply from sophisticated new players will add to the economic pressure on the vulnerable refiners, forcing some to curb production of diesel and other products.”
