PetroChina to close last unit of biggest north China refinery end-June, sources say

PetroChina is scheduled to close the last crude unit, a 200,000-barrels-per-day No.1 unit, at its Dalian Petrochemical Corp refinery on June 30, completing the shutdown of its largest north China refinery, which accounts for nearly 3% of China's national refining capacity. The move aligns with PetroChina's plan to relocate the 410,000-bpd plant by mid-2025, though a final investment decision for the new refinery complex is still pending; crude oil and feedstock inventory drawdown will commence this month.

Analysis

PetroChina is set to complete a significant operational change by closing the final 200,000-barrels-per-day (bpd) crude unit at its Dalian Petrochemical Corp refinery on June 30th, marking the full shutdown of the 410,000-bpd facility, its largest in north China. This strategic closure, which accounts for nearly 3% of China's national refining capacity, aligns with a previously announced plan to relocate and replace the plant with a smaller facility by mid-2025, although a final investment decision for this new complex is still pending. The Dalian refinery primarily processes Russian ESPO blend crude, and its phased shutdown, initiated in late 2023, involves drawing down crude oil and feedstock inventories from this month, with product inventories expected to be cleared by end-August. The slightly negative sentiment for PetroChina (PTR ticker, -0.2 sentiment score) likely reflects the interim loss of refining capacity and the uncertainty surrounding the timeline and specifics of the replacement project, despite the moderate overall market impact score (0.45) suggesting the news is being absorbed without major disruption.

Key Decisions for Investors

• Investors should closely monitor PetroChina for announcements regarding the final investment decision and development timeline for the new, smaller refinery complex, as this will be crucial for assessing the long-term impact on the company's refining capacity and efficiency.
• Consider the potential for temporary disruptions in North China's refined product supply and evaluate possible shifts in regional demand and pricing for Russian ESPO crude due to the Dalian refinery's significant processing volume of this grade.
• Recognize that while the relocation is a strategic initiative aimed at modernization, the pending investment decision and the planned reduction in capacity at the new site warrant careful observation of execution risks and future capital expenditure implications for PetroChina.