Yulong Petrochemical signs feedstock deal for its 400,000-bpd integrated complex with bp and Chevron

China's Yulong Petrochemical on Monday said it had signed memorandum of understanding agreements with bp and Chevron to supply its 400,000-bpd greenfield refinery in northern China. Yulong Petrochemical, which is building the refinery and a 1.5-MMtpy ethylene complex in Shandong province, is aiming to start commercial operation of the whole complex by December 2024, a Shandong government official said at an investment forum in Singapore.

The new refinery in Longkou county in Shandong province is aiming to carry out test runs late this year, a Yulong executive told Reuters on the sidelines of a signing ceremony at the forum. The $20-B Yulong project will add to two large similar-sized refinery and petrochemical complexes started late last year, in China's latest wave of refining expansion focused on petrochemical products such as plastics and chemical fiber rather than transportation fuel.

The Yulong refinery will help Shandong, China's No.3 provincial economy, scale up its fragmented refining sector, made up of some 60 small refiners, in line with Beijing's push to close inefficient plants and build large, competitive manufacturers.

The province was expected to have closed down 10 smaller refineries with combined refining capacity of more than 500,000 bpd by the end of last year to make way for the Yulong plant.

Yulong Petrochemical is 51% owned by private aluminum smelter Nanshan Group, 46.1% owned by provincial government-backed Shandong Energy Group and the remainder by two local firms.

To extend the mega complex's value chain, Longkou government told the forum that it is planning a new chemical park close to the Yulong project to produce high-end chemicals such as degradable plastics and special fibre used for high-performing sports products and safety gears.

Longkou, a county-level city south of Bohai Sea with an annual industrial output of 138.1 B yuan ($19.83 B) last year, is also where China's state-run Sinopec is building a large regasification terminal for liquefied natural gas.

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