Shandong Yulong Petrochemical, a new refiner in China, is preparing to begin trial operations at a 200,000-barrel-per-day crude processing unit later this month, according to sources familiar with the facility’s plans. This could lead to a rise in China’s crude oil imports in the coming months.
The company started its first 200,000-bpd crude unit in September 2024. Since November, this unit has been operating at 90% capacity. Now, Shandong Yulong Petrochemical is ready to begin trial runs at a second 200,000-bpd unit by the end of March, sources told Reuters.
The new unit could increase crude oil imports into China, the world’s largest crude importer, after recent declines due to weak domestic fuel demand. However, the added production might also further weaken already low refining margins in China and the surrounding region.
In response to recent shifts in the global crude market following U.S. sanctions on Russia, Shandong Yulong Petrochemical has reportedly increased its purchases of crude from West Africa and Brazil. The company bought four shipments from Angola and Nigeria last month, according to a trade source. The shipments included Angola’s Dalia, Plutonio, and Girassol crudes, as well as Nigeria’s Nemba crude, all set for delivery in March.
Additionally, Shandong Yulong Petrochemical secured two shipments of Brazilian crude for delivery in April, the source added.
Meanwhile, China’s crude oil imports dropped 5% in the first two months of the year compared to the same period in 2024. The decline was partly due to the latest round of U.S. sanctions on Russian energy, which disrupted global oil flows.
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