China has approved a $20bn petrochemical complex in Shandong oil hub to revive the economy from the effects of the Covid-19 pandemic.
According to a report by Reuters, the National Development & Reform Commission (NDRC) of China granted the initial approval for the project, allowing Shandong province to start planning for construction.
The proposals for a 400,000bpd refinery and a 3Mtpa ethylene plant in Yantai, Shandong, had been delayed for years because of China’s struggle with excess refining capacity.
According to the report, the lead investor of the almost CNY140bn ($20bn) venture is Shandong Nanshan Group, a private aluminium smelter based in Yantai.
The chemical group Wanhua and the Shandong Provincial Government are said to be the other major investors.
The Yulong project will be the latest addition to China’s recent series of petrochemical investments led by the private sector and drawn global giants such as BASF and ExxonMobil.
Last month, Yulong awarded Sinopec Engineering a CNY170m contract for the overall design of the complex, the report added.
The project is expected to help China bring down its petrochemical imports but could also worsen the country’s surplus of refined fuel products.
NDRC and Shandong Yulong Petrochemical, a representative for the project, are yet to confirm the latest development.
Due to the commencement of large integrated petrochemical projects such as Hengli Petrochemical’s Dalian plant and Zhejiang Petrochemical Corp’s Zhoushan complex, Shandong’s refining sector is said to have become less competitive in recent years.