China’s oil refiners will have to shut down old, inefficient operations as authorities set a cap on domestic crude processing capacity under new guidelines promoting green development of the sector, reports Caixin. The capacity lid of 1 billion tons a year starting in 2025 will force a reduction from this year’s 1.008 billion tons, based on a projection by commodities consultancy Sublime China Information. The industry is expected to add 27.5 million tons of capacity this year, Sublime projected, on top of 980 million tons last year, according to data compiled by Everbright Securities.
The guidelines were issued by China’s top economic planner and three ministries. The elimination of outdated and small-scale refineries will be the main tools for cutting output, according to the guidelines. As of 2025, 55% of capacity should be at large refineries that can produce more than 10 million tons annually, the document says.
There are 35 refineries of that size in China, accounting for 52% of capacity, Li Mingfeng, chairman and general manager of Sinopec Research Institute of Petroleum Processing Co., told Caixin. The new target aims to optimize capacity, expand of consolidation and promote high-quality development of the industry, Li said.