Typhoon Lekima halts operations at China’s independent refineries in Shandong

  • Aug 13, 2019
  • Investing

The super typhoon Lekima has forced several independent refineries in eastern China’s Shandong province to suspend their plant operations and land transportation, refinery sources told S&P Global Platts Tuesday.

This will lead to reduction in crude throughputs and oil product sales cut at the plants for up to seven days, the refinery sources added.

The No.9 typhoon Lekima hit Shandong province during the weekend. “Wind and rain is slower than in the weekend with floodremains,” a Dongying-based refiner said.

Refineries located in a lower terrain have been flooded with water in the refining facilities and office buildings, sources said.

Those are mainly located in Guangrao region, where there are more than 10 refineries.

The water was almost waist-high in an independent refinery facility in Zibo, with a capacity of around 5.9 million mt/year, according to an independent refiner.

Quite a few of those refineries have suspended operations, with no feedstock being fed into the units, according to sources.

These refineries included the 5.9 million mt/year Jincheng Petrochemical, 3 million mt/year Yongxin Petrochemical, 8 million mt/year Luqing Petrochemical, 3.5 million mt/year Qicheng Petrochemical, 2 million mt/year Shanneng Petrochemical, 7 million mt/year Huaxing Petrochemical, 5 million mt/year Zhenghe Petrochemical, 3.8 million mt/year Shengxing Petrochemical, 3 million mt/year Hualong Petrochemical and 1.2 million mt/year Hengrunde Petrochemical.

“But it is easy for them [the refineries in flood] to resume operation as those units are not completely shut,” said a Zibo-based refiner.

Shandong is the home of 70% of China’s independent refineries, which account for about 25% of the country’s total refining capacity.

The independent refineries in the province processed 8.8 million mt crude oil and produced 7.2 million mt of oil productsin July, data from local information provider JLC showed.

Meanwhile, a dozen of independent refineries in Dongying and Zibo have paused loading oil products via trucks due to flood after heavy rain.

“The trucking system was called for a stop by local safety authorities since late Saturday night, and is not allowed to resume until the typhoon leaves,” said a refinery source in Dongying.

Independent refineries in Shandong rely on land transportation for their oil products sale. The suspension suggested their product sales were also paused.

On the other hand, it also becomes difficult to take crudes back to those independent refineries, as some still relies ontrucks for transporting crudes from port to refining facilities despite major ports Qingdao port, Yantai port and Rizhao port resuming operations on Monday night to discharge crude oil after a three-day suspension due to the typhoon.

But impacts on state-owned refineries were limited as they have pipelines to transport both crude and oil products.

Sinopec’s Qilu Petrochemical said they kept their throughput as planned which was 1.03 million mt for August, a company source said.

Source: Platts