China's Oil Processing Capacity Increases     

China's refining capacity increased to 477 million t/a oil by the end of 2009, the second largest in the world, from 276 million t/a in 2000 and 324.5 million t/s in 2005, rising 72.8% over the ten years from 2000 to 2009, or up 6.3% annually on average.

1. Domestic oil processing dominated by Sinopec and CNPC

China's refining companies are on a fast development track since 1998 as they integrate refining and petrochemical production as well as distribution. As China's top refiner, Sinopec Group has become the world's No.3 refining company after ExxonMobil and Shell. China's No.2, China National Petroleum Corporation (CNPC), is the world's eighth largest refiner. The number of refineries under the two Chinese state-owned oil giants only accounts for 27.2% of the nation's total. However, their combined crude oil processing capacity takes a dominant 76.8% in the nation.
   Sinopec's oil processing capacity has been rising fast since 2000, increasing from 143 million t/a in 2000 to 163.5 million t/a in 2005, and to 223.5 million t/a in 2009, accounting for 46.9% of the nation's total in 2009. The oil processing capacity of Sinopec's refineries also rose to 5.7 million t/a on average from 4.32 million t/a. Sinopec has eleven refineries with a capacity of 10 million t/a or above by the end of 2009, including Sinopec Zhenhai Refining and Chemical Co., Ltd. which is capable of processing more than 20 million tons of crude a year.
   CNPC's refining capacity also rose fast over the past decade. Its crude processing capacity reached 142.5 million t/a in 2009, or 29.9% of the nation's total, versus 2000's 119 million t/a and 2005's 119.4 million t/a. The average size of its refineries expanded to 5.4 million t/a from 3.52 million t/a. At the end of 2009, the company has five refineries of 10 million t/a or more, including the 20 million t/a PetroChina Dalian Petrochemical Co., Ltd.
   China National Offshore Oil Corporation (CNOOC) commissioned its 12 million t/a Huizhou refinery in May 2009, as the company made a major foray into the refining industry. CNOOC's refining capacity climbed to 19.5 million t/a in 2009, accounting for 4.1% of the nation's capacity, from 2005's 7.5 million t/a. (CCR2009 No. 15)
   Capacity of other refineries, including Shaanxi Yanchang Petroleum Group, whose capacity stood at 14 million t/a at the end of 2008, totaled 88.05 million t/a at the end of 2008. In addition to location Shaanxi province, they are mainly located in Shandong (37 refineries), Liaoning province (15), Guangdong province (14). Their products include gasoline, diesel, lubricant, solvent oil, fuel oil, asphalt, ethylene, propylene, aromatics, liquefied petroleum gas, methyl tert-butyl ether (MTBE).
    Foreign companies also made big progress in China's refining sector. TOTAL holds around 22.4% in Dalian West Pacific Petrochemical Co., Ltd. (WEPEC) in Dalian, which started operation in the middle 1990s. ExxonMobil and Saudi Aramco each holds a 25% stake in the Fujian refining-chemical complex which was put into operation in 2009. The combined refining capacity entitled to foreign companies in China has reached 10.5 million t/a, or 2.2% of China's total. Some major Sino-foreign joint venture refining projects under the planning stage include the Sino-Russia Oriental Petrochemical (Tianjin) Co., Ltd. in which CNPC holds a 51% stake and Rosneft has 49%, the Jieyang project in Guangdong province to be jointly invested by CNPC and Venezuelan state oil company PDVSA, the project between PetroChina, Qatar Petroleum International (QPI) and Shell (China) Limited, and the project between Sinopec Group and Kuwait Petroleum Corporation on Zhanjiang's Donghai Island in Guangdong province. The domestic refining sector is set to become more diversified but still dominated by Sinopec Group and CNPC. (CCR2009 No. 31, NO. 33)

2. Refineries mainly located in east, northeast and south region

In the past ten years from 2000 to 2009, refineries were mainly built in these places that are close to oil resources, market, and along the coast. The majority are located in east areas, and some in central and west China. The refining capacity in east, northeast and south China respectively accounts for 32%, 21% and 15% of the nation's total. Liaoning is China's largest province in terms of refining capacity, with 76 million t/a, followed by Shandong and Guangdong provinces.
   CNPC's refineries are mainly seated in northeast and northwest China, which are not main consumption areas for refined oil products. In 2008, CNPC diverted more than 50% of its refined oil production in northeast and northwest to the southeast coastal areas and to the southwest region. Sinopec's refineries are mainly located in east China and central south China, where demand for oil products is surging. Shandong and Shaanxi provinces are home to most other refineries, which distribute part of their products through CNPC and Sinopec.

3. Enormously integrated refineries

By far, China has 17 refining complex with an annual capacity of 10 million t/a, or more. These mega refineries accounted for nearly half of China's total crude processing capacity. Among them, PetroChina Dalian Petrochemical Co., Ltd. and Sinopec Zhenhai Refining and Chemical are of 20 million t/a. In addition, a number of 10 million t/a refining complex are under construction or planned in China.
   By 2010, China will have 20 crude oil processing bases of the 10 million t/a level, which together will account for 65% of the nation's total capacity, according to the mid and long-term program on the refining sector by the National Development and Refrom Commission. And average refining capacity in one refinery will reach 5.7 million t/a. And according to the 2009 released rejuvenation plan for the petrochemical industry, China will have 10 major refining bases in the future: Ningbo, Shanghai, Nanjing and Dalian, each of 30 million t/a, and Maoming, Guangzhou, Huizhou, Quanzhou, Tianjin and Caofeidian, each of at least 20 million t/a.
   China's refineries continue to expand, with some plants of Sinopec and CNPC now having world-class scale. For example, Sinopec Zhenhai Refining and Chemical's refining capacity reached 20 million t/a at the end of 2007 and PetroChina's Dalian Petrochemical rose to 20.5 million t/a after expansion in 2008. In 2008, Sinopec's Maoming refinery started to expand, its refining capacity will increase to 25.5 million t/a from 13.5 million t/a, also making it one of the world's largest.
   The Chinese refining industry is in intensive development featuring larger scale and integrated operation of refining and chemical production.

China's Refining Plants Location Distribution in 2009
Area    Capacity (million t/a)
East        155
Northeast    99
South       72
Northwest    64.8
North and Central    86.2
Total       477
Source: CNCIC

Small-scale Refineries in China by 2009
Refinery     Location    Processing capacity (million t/a)
Changyi Petrochemical Co., Ltd.             Weifang, Shandong    8
CNGC Liaoning Huajin Chemicals Group Corp.    Panjin, Liaoning    5
Shandong Lijin Petrochemical Plant          Dongying, Shandong    5
Weifang Petrochemical Additive Co., Ltd.