The fallout from the U.S. and Israeli attacks on Iran has reached China, where refiners have delayed two projects with a combined capacity of 500,000 barrels per day amid concerns about crude supply disruptions.
Tankers are backing up at the Strait of Hormuz, the critical shipping chokepoint through which much of the world’s oil trade passes and which Iran has threatened to close to unescorted vessels.
The larger project, a 300,000-bpd refinery being built by Huajin Aramco Petrochemical Co. in Panjin, has been pushed back to September or October, Reuters reported. The venture includes Saudi Aramco, Norinco Group and Panjin Xincheng Industrial Group.
The complex also includes a 1.65 million metric ton per year ethylene cracker and a 2 million t/y paraxylene unit. Aramco said in 2023 it would supply up to 210,000 bpd of crude to the refinery. Ethylene is a key feedstock for polyalphaolefins, or PAOs.
PetroChina has also indefinitely postponed plans to restart a 200,000-bpd crude unit at its older Dalian Petrochemical refinery.
“Maybe the delay of the new capacity is a blessing in disguise, because there have been too many new plants coming on stream in China over the past 10 years, and this has created oversupply conditions. Some plants are constantly running at reduced rates,” Gabriela Wheeler, Lubes’n’Greases’ base oil analyst, told Lube Report.
Chinese refinery utilization has fallen to about 64%, while crude imports dropped roughly 20% year on year to 9.3 million bpd, their lowest level in nearly four years.