PetroChina plans to close its largest refinery, the Dalian Petrochemical plant, located in downtown Dalian, China, by 2025. This facility, which processes 410,000 barrels of oil per day and represents about 3% of China’s total refinery output, will be relocated following years of pressure from local authorities due to safety concerns and previous incidents in the densely populated area.
The company has already reduced its crude processing capacity by half, or 210,000 bpd. Two years ago, PetroChina’s parent company, CNPC, reached an agreement with Dalian authorities to build a smaller 200,000-bpd refinery on Changxing Island, although a final investment decision for this new site has not yet been made.
This closure comes amid challenges for Chinese refiners, including a current overcapacity situation and declining road fuel demand, which is shifting toward electric vehicles and LNG-fueled trucks. Analysts suggest that diesel demand in China has likely peaked due to a surge in LNG use in heavy-duty vehicles, exacerbated by the ongoing property sector crisis. As a result, the outlook for oil demand growth in the world’s leading crude importer appears bleak. [1]