Hengli Starts Group II/III Plant

Hengli Petrochemical Co. announced this month the start-up of a Northeast China refinery that includes a 540,000 metric ton per year API Group II and III base oil plant.

The project is the latest in a recent spate of Group III capacity additions in China. It also represents another step in the rise of independent Chinese refiners.

Located on Changxing Island off the industrial seaport of Dalian, Henglis overall refinery is one of Chinas largest, with crude oil throughput capacity of 20 million t/y, or 383,000 barrels per day. In a Dec. 10 filing on the Shanghai Stock Exchange, the company reported that construction is finished and that it had begun starting up the various units.

The base oil plant has capacity to make 350,000 t/y of Group III and 190,000 t/y of Group II, Henglis Xu Chao told Lube Report this week. China has more base oil plants than any other country but only three facilities that make Group III. In 2016 government-owned oil giant Sinopec expanded and upgraded its Maoming plant, which now has 300,000 t/y of Group III capacity. Coal giant Luan started up a 300,000 t/y Group III plant at its coal-to-liquids refinery in Changzhi, Shanxi province, earlier this year.

Hainan Handi Sunshine Petrochemical is in the midst of a Group II/III expansion of its base oil plant on Hainan Island and expects the project to be completed next year.

Until now Hengli has been primarily a chemicals producer that distinguished itself by operating the worlds largest purified terephthalic acid plant. PTA is a precursor for the production of textiles and plastics. With the opening of its Dalian refinery the company becomes a supplier of oil products, as the facility will produce 9.9 million t/y of gasoline, diesel and aviation kerosene, along with paraxylene, benzene, polypropylene, acetate and heavy aromatics.

Hengli is new to the base oil business, and Xu said the company has yet to determine where those barrels will be placed.

The specific applications need to be confirmed by product indicators, he said. We hope our products can be involved in both the domestic and foreign markets. We will not be producing our own lubricants.

Chinas refining industry was for years dominated by Sinopec and its state-owned twin, PetroChina, but independent companies have been on the rise since 2015 when Beijing liberalized restrictions on their ability to import crude oil. President Xi Jinpings administration has handed out quotas for crude imports as a way both of encouraging competition in the refining sector and prodding independents to reduce pollution. Earlier this year Hengli received a permit to import 400,000 b/d of crude - essentially the full supply of feedstock needed for the Dalian refinery.