China’s central planning agency has given the go-ahead for planning to begin for the construction of a mega refinery in East China’s Shandong province that will replace at least 10 barely profitable facilities in the oil refining hub, reported Caixin.
The approval marks another step forward for a provincial government plan to consolidate the privately owned refineries known as “teapots” in an effort to improve their profitability and reduce overcapacity.
After two years on the drawing board, the refinery project has been given the green light to move forward with more detailed construction planning, multiple industry insiders have indicated.
The planned refinery will be operated by Shandong Yulong Petrochemical Ltd., a company created under the consolidation plan to operate the new refinery. Once construction of the RMB 127.8 billion ($18 billion) first phase is completed, the refinery will be able to process up to 20 million tons of oil a year.