PetroChina plans to shut down its domestic oil refinery in Dalian by mid-2025, marking China’s first major closure of a state-operated refinery, as reported by Reuters.
The move is part of a larger strategy to replace the current facility with a smaller one at a new site, aimed at managing overcapacity and addressing environmental concerns.
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PetroChina will shut down the remaining section of the Dalian Petrochemical plant, which still operates in northeastern China with a total capacity of 410,000 barrels per day (bpd).
It had already shut down 210,000bpd of capacity, beginning in October 2023.
The Dalian plant accounts for 3% of China’s total refinery capacity, and its closure is expected to reduce the country’s crude imports.
The decision to close is influenced by the industry’s struggle with overcapacity and a decline in fuel demand due to slower economic growth and increased electrification of vehicles.
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By GlobalDataIt is also in line with Beijing’s policy to limit the industry’s size to address greenhouse gas emissions and manage overcapacity.
The closure is part of a long-standing proposal by officials to relocate the refinery from its current position near a densely populated area, following several deadly incidents including a major oil spill in 2010, an explosion in 2013 and a fire in 2017.
To compensate for the loss of Dalian’s production, PetroChina will redirect crude oil to other subsidiary plants in northeast China, such as WEPEC in Dalian and nearby Jinzhou.
Dalian primarily processed Russian ESPO crude from Siberian fields delivered via pipelines and Daqing crude from China’s field in the northeast.
In November 2022, the Dalian authorities announced a framework agreement in which PetroChina’s parent company, the China National Petroleum Corporation, committed to building a new 70bn yuan ($9.84bn) refinery and chemical complex on Changxing Island, a two-hour drive from Dalian.
In August 2024, Arrow Energy, a joint venture between Shell and PetroChina, announced the beginning of Phase 2 development for the Surat gas project in Queensland, Australia.
The proposed project will include a 200,000bpd crude refinery, half of the current plant’s capacity, and a 1.2 million tonne per year ethylene complex.
However, the project is still at a pre-feasibility stage, and PetroChina has yet to make a final investment decision.
