China's Yulong Petrochemical Signed An Agreement with BP and Chevron For The Supply Of Crude Oil To Its Refinery And 1.5 Million Ethylene Project

Yulong Petrochemical Is In Preparatory Deals With BP And Chevron For Oil

China's Yulong Petrochemical announced that it had signed a cooperative agreement (memorandum of agreement (MOA)) with BP (BP.L) and Chevron (CVX.N) to deliver its greenfield refinery in northern China with 400,000 barrels of oil per day.

The Petrochemical company that is in the middle of constructing the refinery and an ethylene complex with a 1.5-million-tonne-per-year capacity in Shandong province is striving to begin commercial operation for the entire complex by December 2024, according to a Shandong government official.

Request Access For Regular Price Update of Propylene

A spokesperson for BP in China was unable to give an immediate response to the agreement. Chevron refused to remark on commercial negotiations.

The latest Longkou county refinery in Shandong province is aspiring to conduct test runs during the year-end, as per a Yulong executive.

The USD 20-billion Yulong project that is going to add on two huge same-sized refinery and petrochemical complexes began during late last year; in the recent wave of refining expansion in China concentrated on petrochemical products like plastics and chemical fibre instead of transportation fuel.

Shandong, which is China's No.3 provincial economy, will gain help from the Yulong refinery and boost its fragmented refining sector, comprising of a few sixty small refiners, aligned with Beijing's stimulus to shut down unproductive plants and instead construct big, competitive manufacturers.

The province was anticipated to have shut down ten smaller refineries with a total refining capacity of over 500,000 barrels per day till last year's end to clear the way for the Yulong plant.

51% of Yulong Petrochemical is owned by private aluminium smelter Nanshan Group, and 46.1% is owned by Shandong Energy Group, backed by the provincial government, along with the rest by two local firms.

In order to expand the value chain of the mega-complex, the Longkou government conveyed to the forum that it has plans for the latest chemical park nearby the Yulong project for producing high-end chemicals, including degradable plastics and special fibre, which is employed in high-performing sports products and safety gears.

A county-level city, Longkou, located south of the Bohai Sea with a yearly industrial output of 138.1 billion yuan (USD 19.83 billion) previous year, is also where the Chinese state-run Sinopec is constructing a huge regasification terminal for LNG (liquefied natural gas).

The Upcoming Petrochemical Project To Be Dominated By China Beginning In Asia Through 2027

China will likely dominate all the approaching petrochemical projects in Asia since it will most probably begin the functions of 410 petrochemical projects between 2023 and 2027.

The country will account for around half of the petrochemical projects starting in 2027 in Asia. Of the 410 projects that are anticipated to begin functions in the country, polypropylene projects leading with 48, followed by propylene projects at 42.

According to an analyst, China is still adding a substantial number of petrochemical projects to fulfil the tumefying domestic industrial and consumer demand and to lower imports. The approaching projects are also a component of the plans in China to accomplish self-sufficiency in petrochemicals.

The polypropylene projects would comprise about 12% of all petrochemical projects beginning in China between 2023 and 2027.  Amid approaching polypropylene projects, North Huajin Refining and Petrochemical Liaoning Polypropylene Plant is leading with a  1.0 mtpa production capacity and is anticipated to begin operations by 2027.

Amongst the propylene projects that are anticipated to be online between 2023 to 2027, Shandong Yulong Petrochemical Longkou Propylene Plant 1 dominates with a 2.30 mtpa production capacity. Currently, the project is under construction and is anticipated to begin functioning in 2025.

Read More About Crude Oil, Propylene Production Cost Reports - REQUEST FREE SAMPLE COPY IN PDF

According to the Procurement Resource article, China's Yulong Petrochemical has dealt with BP (BP.L) and Chevron (CVX.N) to deliver its greenfield refinery in northern China with 400,000 barrels per day. The Petrochemical company is on its way to constructing the refinery, and an ethylene complex with a 1.5-million-tonne-per-year capacity in Shandong province is striving to begin commercial operation for the entire complex by December 2024.

Furthermore, the approaching petrochemical projects in Asia are anticipated to be dominated by China since the country will account for around half of the petrochemical projects starting in 2027 in Asia.