Chinese energy company PetroChina will close its Dalian refinery by mid-2025, making it the first state-owned refinery in China to permanently shut down.
Weakening fuel demand and the rapid growth of electric vehicles have made the Dalian facility, which includes a base oil plant, economically unviable.
Dalian has capacity to process 410,000 barrels of crude oil per day. It can also make 417,000 metric tons per year of API Group I base oil, in addition to fuels that are sold both in-country and to foreign markets, particularly Japan and Korea. It accounts for about 3% of China’s total refining capacity.
Including the Dalian plant, China has capacity to make 15.3 million metric tons per year of base oil, according to data gathered by Lubes’n’Greases. That far exceeds demands of the domestic finished lubricant market, and many base oil plants in China operate at significantly less than capacity.
Feedstock comes from eastern Siberia via pipeline. China is not a signatory to the United States and European Union-led sanctions on Russian energy exports imposed after Russia’s invasion of Ukraine in 2022.
The shutdown has been ongoing since 2023 with the last units going off stream by 2025. China National Petroleum Corporation, PetroChina’s parent company, said it will replace Dalian with a smaller refinery. Whether the replacement will produce base oil is unclear.