Independent refiners based in Shandong may be in trouble after China’s environment authorities revealed that some had added additional capacity without the required clearances.
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The Ministry of Ecology and Environment announced that 19 independent refineries in Dongying with a combined capacity of 60.4 millions mt/year were found to have broken environmental regulations.
These refineries are controlled by the provincial government. There were issues regarding construction that did not require approval, the ministry stated in a statement without naming the plants.
Shandong Guanyue Petrochemical, which added 3.5 millions mt/year to its refining capacity without approval, was also affected. According to the statement Dongcheng Holdings also contains crude distillation units which should have been mutilated.
The companies were unable to be reached for comments.
Dongying, the hub for refining in eastern China’s Shandong region, is where more than 20 independent oil refineries are located.
Shandong is home of the country’s independent refineries, with a total refining capability of 169.4 millions mt/year. According to JLC (a local energy information provider), they account for approximately 52% of China’s total independent refining capacities.
According to analysts and refinery sources, Shandong’s independent refineries have been subjected to various government checks on taxes, operations, and environmental protection. This has had an impact on their run rates, as well as future cargo demand, this year.