Category: Nieuws

Targray, a global leader in the supply of renewable fuels, feedstock, and supply chain solutions, is proud to announce its new partner membership within Green Marine, a renowned voluntary environmental certification program for the North American and European maritime industries.
This strategic engagement solidifies Targray’s commitment to decarbonizing maritime shipping, a sector which consumes more than 330 million metric tonnes of fuel each year, while reinforcing the company’s support of the global transition to low-carbon fuels.

The maritime industry is at a critical juncture with increasing pressure to reduce its carbon footprint and greenhouse gas emissions. Targray’s Green Marine membership highlights the company’s dedication to leveraging its global reach and expertise to contribute significantly to the reduction of greenhouse gas emissions in the maritime sector.

“Maritime shipping is the backbone of global trade, and the industry’s transition to low carbon fuels is essential for a sustainable future,” said Targray President, Andrew Richardson. “Targray’s international presence uniquely positions us to support bunker fuel suppliers and their customers worldwide in the journey toward sustainability and decarbonization.”

Green Marine is a leading non-profit North American environmental certification program for the maritime industry which expanded to Europe in 2020, with a mission of going beyond regulations and fostering real environmental improvement in the maritime industry. They engage stakeholders, including ship owners, ports, terminals, and shipyards, in their commitment to continuous improvement.

About Targray

Targray is a leading global provider of commodities and advanced materials for the renewable fuels, solar, battery and agricultural commodity sectors. Supported by a vast rail fleet and terminal network, the company is an international leader in the sourcing, transportation, storage, trading, and supply of biofuels and feedstock. Its innovative solutions help energy suppliers meet the growing demand for low carbon transportation fuels.

Targray’s Environmental Commodities business offers leading expertise in environmental products & services including renewable energy certificates, carbon credits and offsets for voluntary and compliance carbon market around the world.

Since 1987, Targray has worked with partners in over 50 countries to create sustainable value across the supply chain. The company is committed to delivering solutions that help reduce the world’s carbon footprint while enabling customers to create safer, more reliable products for consumers around the world.

About Green Marine

Green Marine is a voluntary initiative which helps its participants to improve their environmental performance and targets key environmental and maritime transportation issues related to air, water and soil quality, biodiversity protection, and community relations. Founded in 2007, Green Marine quickly distinguished itself through its credibility and its capability to foster the continual improvement of the environmental performance of its participants. Initially conceived for the St. Lawrence and Great Lakes maritime sector, the binational environmental certification program quickly generated unexpected interest in the industry and now has a North American reach.

In 2019, Green Marine collaborated with Surfrider Foundation Europe to export the environmental certification program to France to give birth to Green Marine Europe in 2020. The Green Marine Europe environmental certification program operates on the same proven model as the North American program.

Targray, November 23, 2023

The United States is seeking to buy up to three million barrels of oil for delivery in January 2024 to replenish the country’s strategic petroleum reserve, the Department of Energy said on Monday.

“This is the second solicitation for January 2024 delivery as DOE aims to purchase oil when it can purchase at a good deal for taxpayers,” it said in a statement. Last month the administration said it hoped to buy 6 million barrels of crude oil for delivery in December and January.

Reuters, David Ljunggren, November 6, 2023

In this piece, we will take a look at the 11 best oil refinery stocks to buy. If you want to skip our overview of the dynamics within the oil industry and recent developments, then take a look at the 5 Best Oil Refinery Stocks To Buy.

The modern day oil industry is responsible for fueling global transportation, industrial, and energy networks. Whether it’s electricity for large scale cloud computing data centers, cargo ships, aircraft, or power generation plants, humanity’s reliance on fossil fuels is responsible for both economic growth and pollution.

Within the oil sector, the same and different companies are present at key stages of the supply chain. After crude oil is extracted from the ground, it must be processed to bring it up to standard for consumption by machinery. Oil extracted from the ground is transformed into a variety of different end products, such as gasoline, kerosene, diesel, and heavy fuel oil. This transformation occurs in an oil refinery, which is one of several refineries that are responsible for converting cruder raw inputs into high grade products. Some examples of refineries include sugar and metal refineries.

Oil refineries are operated by large oil giants such as Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) and smaller companies with isolated business operations. Additionally, the heavy capital expenditure required to set up refineries often requires government involvement or financing of mega oil refining projects. For instance, Indian billionaire Mukesh Ambani and his petrochemical, retail, media, and telecommunications behemoth Reliance Industries Limited (NSE:RELIANCE.NS)’s oil refinery in the Indian state of Gujarat was partly built by a $500 million loan guarantee by the official credit export agency of the United States of America, the Export-Import Bank of the United States. Similarly, the Indian government has allocated $3.6 billion for oil refineries as part of its 23/24 budget.

These massive capital costs create high barriers to entry in the oil refinery business, leading to the being dominated by a few private sector firms or large state owned enterprises. For instance, consider the data that we gathered as part of the coverage of the Top 20 Largest Refineries In The World. While Reliance’s Gujarat oil refinery is the largest in the world and privately owned to boot, the largest oil refineries in Venezuela, the United Arab Emirates, Kuwait, Saudi Arabia, and China are owned by state enterprises. However, in South Korea, the U.S., and Taiwan, oil is refined by private companies which include some of the largest oil companies in the world.

Zooming out to take a broader look at the global oil refining industry, it is naturally one of the biggest in the world. According to data from Skyquest Technology, the oil refining industry was worth $1.49 trillion in 2021 and grew to $1.5 trillion by the end of 2022. From then until 2030, it can grow at a compounded annual growth rate (CAGR) of 5% to be worth an estimated $3.7 trillion by the end of the decade. Refineries sit at the very root of not only the oil industry but also the gas industry, since without them, the modern day supply chain for fossil fuels cannot function. Therefore, it’s unsurprising that the $1.5 trillion market value of the oil refinery industry is a sizeable fraction of the total value of the global oil industry. This was estimated to sit at $7.3 trillion by 2022 end. Broadly speaking, these two data points show that the oil refinery industry accounted for roughly 21% of the global oil industry in 2022. Some other sectors that account for the remaining share of the oil sector include extraction, midstream transportation and storage, marketing, and retail operations at the pump or the port.

Zooming back in, some of the biggest pure play oil and gas refining and marketing companies that trade on American stock exchanges are Marathon Petroleum Corporation (NYSE:MPC), Phillips 66 (NYSE:PSX), and Valero Energy Corporation (NYSE:VLO). Like the broader corporate world, it’s earnings season in the oil refinery sector, and these three giants have also reported their financial results. Starting from Marathon Petroleum Corporation, the firm’s profit for the third quarter of 2023 beat analyst estimates by sitting at $8.14 in adjusted net income per share. Similarly, Valero’s $7.49 adjusted net income per share also surpassed analyst estimates. Phillips 66 however suffered from low refining margins as its adjusted earnings per share of $4.63 was thirteen cents lower than the consensus forecast.

The broader oil market has been quite jittery these days because of fresh conflict in the Middle East, and while oil prices have remained relatively stable, the conflict between Israel and Palestine risks impacting oil supply from West Asia. On this front, Valero Energy Corporation (NYSE:VLO)’s chief executive officer Gary Simmons believes that the U.S. can relieve some of the risks to its oil imports if sanctions against Venezuela are relaxed. Venezuelan oil is sanctioned through actions against the state owned PDVSA, and Simmons shared in recent earnings call that an ease in sanctions can lead to 250,00 barrels of daily oil supply being diverted from the Far East to the U.S.

With this context, let’s take a look at the best oil refinery stocks to buy. The top three oil refinery stocks in this list are Marathon Petroleum Corporation, Valero Energy Corporation, and Phillips 66.

An aerial view of an oil and gas refinery, with its tall smoke stacks and complex piping.

Our Methodology
To compile our list of the best oil refinery stocks, we narrowed our focus from the broader oil industry to firms that limit themselves to oil refineries. For instance, while oil mega giants such as Saudi Arabian Oil Company (TADAWUL:2222.SR), Exxon Mobil Corporation, Exxon Mobil Corporation and Shell plc also operate refineries, they are excluded from the list since they are not pure play oil refinery companies.

A list of the 21 largest oil refining firms was initially compiled and then these were ranked by the number of hedge funds that had invested in them as of Q2 2023 end. Out of these, the top oil refining stocks are as follows.

11 Best Oil Refinery Stocks To Buy
Adams Resources & Energy, Inc. (NYSE:AE)
Number of Hedge Fund Investors in Q2 2023: 3

Adams Resources & Energy, Inc. (NYSE:AE) is a backend oil refinery company that provides raw oil to refiners. The firm is due to report its third quarter earnings in November, and analysts have set a 15 cent EPS estimate.

Three out of the 910 hedge funds tracked by Insider Monkey were the firm’s investors during Q3 2023. Adams Resources & Energy, Inc. (NYSE:AE)’s largest hedge fund investor is Jim Simons’ Renaissance Technologies as it owns $6.9 million worth of shares.

Adams Resources & Energy, Inc. (NYSE:AE) joins Valero Energy Corporation (NYSE:VLO), Marathon Petroleum Corporation (NYSE:MPC), and Phillips 66 (NYSE:PSX) in our list of the top oil refinery stocks to buy.

Aemetis, Inc. (NASDAQ:AMTX)
Number of Hedge Fund Investors in Q2 2023: 7

Aemetis, Inc. (NASDAQ:AMTX) is a biodiesel company that converts agricultural products into the fuel. The firm has a strong presence in India, with its subsidiary landing another multi million dollar deal with Indian OMCs in October 2023.

As of June 2023, seven hedge funds out of the 910 part of Insider Monkey’s research had held a stake in Aemetis, Inc. (NASDAQ:AMTX). Todd J. Kantor’s Encompass Capital Advisors is the company’s biggest investor out of these through its $13.2 million investment.

CVR Energy, Inc. (NYSE:CVI)
Number of Hedge Fund Investors in Q2 2023: 14

CVR Energy, Inc. (NYSE:CVI) is an Icahn Enterprises subsidiary and it refines oil into gasoline and other similar products. Its third quarter financials were quite a striking set of results as they saw the firm grow its net income from the year ago quarter’s $93 million to a whopping $353 million in Q3 2023.

14 out of the 910 hedge funds tracked by Insider Monkey had invested in the firm during the previous quarter. CVR Energy, Inc. (NYSE:CVI)’s largest hedge fund investor is Carl Icahn’s Icahn Capital LP due to its $2.1 billion investment.

Vertex Energy, Inc. (NASDAQ:VTNR)
Number of Hedge Fund Investors in Q2 2023: 17

Vertex Energy, Inc. (NASDAQ:VTNR) is an American company headquartered in Houston, Texas with motor oil and other refineries. Its operational outlook for the third quarter created quite a stir in October when Vertex Energy, Inc. (NASDAQ:VTNR) revealed that the throughput in its facilities for the third quarter would exceed the high end of its previous guidance by three thousand barrels per day.

During this year’s second quarter, 17 out of the 910 hedge funds part of Insider Monkey’s database had bought and owned Vertex Energy, Inc. (NASDAQ:VTNR)’s shares. The firm’s biggest shareholder in our database is Adam Usdan’s Trellus Management Company as it owns 2.1 million shares that are worth $13.2 million.

Delek US Holdings, Inc. (NYSE:DK)
Number of Hedge Fund Investors in Q2 2023: 19

Delek US Holdings, Inc. (NYSE:DK) is a semi diversified oil company with a sizeable refining division. The firm’s shares have done well on the market over the past six months as they are up by 27%. However, analysts seem to be unimpressed, as the shares are rated Hold on average.

After digging through 910 hedge funds for their June quarter of 2023 shareholdings, Insider Monkey discovered that 19 were the firm’s investors. Delek US Holdings, Inc. (NYSE:DK)’s largest investor out of these is Ken Fisher’s Fisher Asset Management as it owns $31 million worth of shares.

Par Pacific Holdings, Inc.
Number of Hedge Fund Investors in Q2 2023: 21

Par Pacific Holdings, Inc. (NYSE:PARR) is a small oil refining company with three facilities under it belt. The firm expanded its oil refining portfolio in June 2023 as it bought an oil refinery previously owned by Exxon Mobil in Montana.

For their second quarter of 2023 shareholdings, 21 out of the 910 hedge funds tracked by Insider Monkey had held a stake in Par Pacific Holdings, Inc. (NYSE:PARR). David Rosen’s Rubric Capital Management owns the biggest stake among these, which is worth $71 million and comes via 2.6 million shares.

Marathon Petroleum Corporation (NYSE:MPC), Par Pacific Holdings, Inc. (NYSE:PARR), Valero Energy Corporation (NYSE:VLO), and Phillips 66 (NYSE:PSX) are some top oil refinery stocks being bought by hedge funds.

Yahoo Finance, Ramish Cheema, November 5, 2023

Houston-based Enterprise Products Partners is investing $3.1 billion into its natural gas liquids (NGL) operations, building a pipeline, adding new plants to process natural gas, and switching an oil pipeline back to an NGL pipeline.

The company said the projects will support the continuing production growth in the Permian Basin of west Texas and southeastern New Mexico. The company forecasts production growth in the prolific resource play to increase by more than 700,000 B/D in 2023 and grow by about 1.5 million B/D for a 3-year period ending in 2025.

Enterprise said it sees production growth increasing by up to another 15%, or greater than 1 million B/D by the end of 2030, with NGL production from the Permian potentially growing by more than 500,000 B/D to nearly 4 million B/D by the end of 2030.

Enterprise’s Co-Chief Executive Jim Teague said that the organic investments are needed to “facilitate the next phase of Permian production growth and will also complement our expansions of downstream pipelines and marine terminals to deliver energy products to growing domestic and international markets.”

The company will build the 550-mile-long Bahia NGL pipeline capable of transporting up to 600,000 B/D of NGLs from the Delaware and Midland basins to the company’s fractionation complex in Chambers County, Texas.

The pipeline includes a 24-in.-diameter segment from the Delaware Basin, connecting to a 30-in.-diameter segment from the Midland Basin to the fractionation complex. The wholly owned pipeline could begin operation in the first half of 2025, the company said.

To provide incremental NGL transportation service until the Bahia Pipeline is completed, the company said it initiated a conversion of the Seminole Pipeline, which carries up to 210,000 B/D of crude oil, back to NGL service in December 2023.

The pipeline began transporting crude oil in the second quarter of 2019 and was then known as the company’s Midland-to-ECHO 2 crude oil pipeline. Before 2019, the Seminole Red Pipeline was in NGL service, the company said.

Enterprise is also building two natural gas processing plants and a fractionation unit. The natural gas processing plants—the Mentone 4 and the Orion—will service the Delaware and Midland basins, respectively. Construction has begun on both plants, with each having the capacity to process more than 300 MMcf/D of natural gas to extract more than 40,000 B/D of NGLs.

The company is adding a fractionation unit at its Chambers County complex. The plant will have the capacity to fractionate up to 195,000 B/D of NGLs, and a new deisobutanizer unit will be able to separate up to 100,000 B/D of butanes.

JPT, Jennifer Presley, November 11, 2023

Despite ambitious decarbonisation targets, issues related to energy transition governance, regulations and flexibility markets hinder progress, according to a new report.

Despite having ambitious decarbonisation targets, the UK faces significant challenges in achieving them.

That’s according to the Energy Transition Readiness Index (ETRI) 2023, which suggests energy transition governance, regulatory issues and flexibility market concerns contribute to investment uncertainty and impede renewable energy deployment in the UK.

The report emphasises the need for clear governance and regulatory stability to attract investors and accelerate the energy transition.

The UK ranks ahead of several European countries in the ETRI but lags in terms of flexibility market development, crucial for balancing high-renewable grids.

The ETRI 2023, produced by the Association for Renewable Energy and Clean Technology (REA) and sponsored by Eaton and Foresight Group, assesses electricity markets in 14 European countries.

While the UK has improved its overall ranking, it faces challenges in providing fair, transparent and accessible flexibility markets.

Flexibility is vital for balancing renewable grids as coal and gas generation declines.

However, the UK’s progress in flexibility markets is not comprehensive or fast enough, according to the report.

Survey respondents suggested that introducing measures similar to the US Inflation Reduction Act would accelerate energy transition progress in the UK.

The REA stresses the severe financial consequences of slowing the energy transition.

ETRI 2023 recommends creating open markets for low carbon flexibility assets, prioritising flexibility market reforms and addressing technology and process barriers.

Energy Live News, Dimitris Mavrokefalidis, November 8, 2023

Oil traders will pay premiums for the annual supply of most grades of Middle East crude in 2024, trade sources said, on concerns over supply from the region after the Israel-Gaza conflict heightened geopolitical tensions.

The annual deals between trading firms purchasing from producers and equity holders of Middle East crude were mostly concluded by the start of this week, nearly a month since the conflict between Israel and Hamas militants broke out, which has sparked fears of a contagion in the region and made global oil prices volatile.

The Middle East accounts for a third of global oil production.

Volatility in oil markets may have driven up prices for some of the cargoes sold in these annual deals, one trader said.

While premiums for most of the grades held steady, some of the Murban and Oman cargoes with 5% operational tolerance had been sold at steep premiums of 30-35 cents a barrel to their respective official selling prices (OSPs), the sources said.

Operational tolerance is the percentage volume that the buyer or the seller could adjust during the loading of the cargo, depending on demand and shipping logistics.

For cargoes with an operational tolerance of 0.2%, Abu Dhabi’s flagship Murban crude are priced at between 10 and 12 cents a barrel to their OSP while Oman was sold at premiums of 4-5 cents a barrel, the sources said.

Another Abu Dhabi light grade Das, with the same operational tolerance level, was traded at premiums between 1 and 7 cents to its OSP, one of the sources said.

Supply of Upper Zakum crude, the medium Abu Dhabi grade, swung between small discounts and small premiums to its OSP for cargoes with 0.2% operational tolerance, the sources said.

Reuters, Florence Tan, November 10, 2023

IHI Corporation (IHI) and Royal Vopak (Vopak) have signed a Memorandum of Understanding (MOU) to jointly explore the development and operation of efficient, high value-added ammonia terminals in Japan. IHI and Vopak will furthermore assess a collaboration outside of Japan.

The collaboration focuses on large-scale ammonia storage terminals, strategically positioned for the economical distribution of ammonia. Ammonia plays an important role as a fuel for reducing carbon emissions from thermal power generation and as a hydrogen carrier, both in Japan and abroad. In addition, the study will examine the possibility of streamlining the operation of ammonia terminals to enhance price competitiveness, as well as the conversion and supply of various hydrogen derivatives.

IHI is currently working toward the realization of a decarbonized society through the development of integrated technologies from upstream to downstream, including fuel ammonia production, storage, and utilization. IHI is Japan’s leading manufacturer of ammonia storage tanks, having designed and constructed approximately 70% of all ammonia storage tanks in Japan. Currently, IHI is developing comprehensive technology for large-scale ammonia receiving terminals utilizing the large storage tank technology that IHI has cultivated in the field of LNG storage tanks.

With over 20 years of ammonia storage experience, Vopak has extensive knowledge on safe handling and storage of ammonia to facilitate the development of large-scale ammonia import, storage and distribution infrastructures. Currently, Vopak has ammonia storage operations in China, Saudi Arabia, Singapore, Malaysia and in the US. Most recently in the United States, Vopak and its global partners are collaborating on the pre-FEED for the development of a large-scale, low-carbon ammonia production and export project on the Houston Ship Channel.

“We are pleased to begin joint discussions with Vopak on the development and operation of ammonia terminals. As demand for ammonia continues to grow, we recognize the need to rationalize terminal operations and strengthen price competitiveness in order to meet this demand. We will leverage the strengths of both companies to form a terminal that can be utilized in the future and to build a robust supply chain.” said Jun Kobayashi, Board Director, Managing Executive Officer, IHI Corporation.

“We are excited to work with IHI and look forward to collaborating together as we advance the commitment of both companies towards a low-carbon future. As we embark on this journey, we envision synergies between both companies that will create innovative solutions to accelerate the development of new supply chains for the energy and feedstocks of the future,” said Chris Robblee, President of Asia & Middle East, Vopak.

Vopak, Yusuke Saito, November 21, 2023

Clean energy is flush with growth potential and these stocks stand ready to benefit.

Air Products & Chemicals (APD): This pick offers a diversified play on green hydrogen backed by a solid core business.

BP (BP): While this is a controversial pick if clean energy is what you’re after, this gas titan has announced plans to build out its alternative energy arms with a focus on hydrogen.

Plug Power (PLUG): This group has a stronghold on the hydrogen fuel cell market.

Economies around the world are turning to clean energy sources in a bid to slow global warming, and that’s brought hydrogen stocks into demand. Hydrogen on its own is nothing new. Chemical companies have been producing and selling it for years. But using it as an energy source is a new concept. At present, it makes up around 0.1% of the world’s energy mix. That’s expected to surge to 10% by 2050 if we continue to push for net zero. And while 10% isn’t a massive slice of the pie, the growth between 0.1% and 10% in just over two decades opens the door for opportunity.

When it comes to hydrogen stocks to buy now, you have two strategy options. The first and more obvious choice is to go all-in on a company supporting the transition. That means companies that make and sell the technology we need to turn hydrogen into power efficiently. Ideally, you’re looking for a company that supports green hydrogen, the cleanest form there is. But other types of hydrogen, like blue and grey also come with a fair helping of opportunity.

For those without such a strong stomach for risk, there are some diversified picks. These are companies whose bread and butter come from other businesses, but they’re still building out a hydrogen business. While the highs won’t be quite as high for these picks while green energy picks up steam, the low risk of failure is minimal.

Let’s take a look at three hydrogen stocks together, focusing on two diversified picks and one all-in alternative.

Air Products & Chemicals (APD)
On the risk spectrum, Air Products & Chemicals (NYSE:APD) probably ranks lowest on this list of hydrogen stocks. That’s because hydrogen isn’t the only weapon in this chemical company’s arsenal. In fact, it’s only a drop in the bucket at present, because the group’s backed by an enormous international industrial gas business that supplies a wide range of industries and geographies.

However, it’s working to build out its green hydrogen arm with big capital commitments to its green and low-carbon hydrogen projects. APD’s contracts tend to be relatively sticky and stretch well into the future, meaning cashflow is reliable and healthy. That means the group can continue to fund its core business without compromising future growth in hydrogen.

APD is working to create a sprawling network for hydrogen plants, with more than 100 already under its umbrella. Given that most governments are keen to push the net zero agenda forward, the group also has a fair bit of support in getting its projects online. This will be a welcome tailwind as APD continues to build itself a top-tier foundation within the hydrogen energy space.

BP (BP)
Though it may not be top of mind when it comes to hydrogen stocks, BP is another diversified player within the space that’s worth a look. While the group is mainly known for and certainly reliant on drilling for oil, BP is working to develop its hydrogen energy arm in one of several bids to remain relevant in a low-carbon future. In fact, unlike many of its other oil and gas peers, BP has set a net zero goal for 2050. A large part of this plan involves hydrogen energy.

The group says it plans to own some 10% of the hydrogen market in its key markets. If it can make good on those plans, that would offer investors some impressive growth opportunities as the market balloons.

BP is still worlds away from realizing its hydrogen potential—its currently developing various different types of hydrogen production facilities. But these projects appear to be promising, with management saying its UK-based plants could make up 15% of the region’s 2030 hydrogen target.

Plug Power (PLUG)
It’s impossible to talk about hydrogen stocks without bringing Plug Power (NASDAQ:PLUG) into the mix. The group is a leader in fuel cell technology and operates over 180 hydrogen refueling stations across North America. It’s a leader in the process of creating an end-to-end green hydrogen business that will produce, store and deliver the fuel cell.

Without a doubt, PLUG is well on its way to success, with a great deal of expertise across the entire value chain. However, the group’s been building by way of acquisitions, leaving cash thin on the ground. Management says profits are just around the corner, but investors aren’t quite as sure, given the increasingly challenging environment.

While Plug’s journey has been a rocky one, it looks like it could be in for more turbulence ahead. But ultimately, the group looks to be in a strong position among hydrogen stocks looking to capitalize on the market. Positioned to be a major beneficiary of government support for clean energy, PLUG will be well placed to make the most growing popularity for hydrogen fuel.

Investor Place, Tyrik Torres, November 20, 2023

China has set a minimum size for new oil refineries and will ban small crude processors that claim to be chemicals or bitumen producers under a plan to limit total capacity at 1 billion metric tons, or 20 million barrels per day, by 2025.

Following are key details on China’s steps, outlined this week, to rein in a refining industry that recently surpassed the United States to become the world’s largest.

WHAT IS CHINA TRYING TO ACHIEVE?
The overall capacity cap, first unveiled in October 2021 as part of a plan to reach peak carbon emissions by 2030, is aimed at curbing excessive domestic refinery production and supply overhang to reduce greenhouse gas emissions.

China has long sought – and sometimes struggled – to remove excess capacity in highly polluting heavy industrial sectors such as steel and cement.

The think tank Sinocarbon says the refining and petrochemical sectors accounted for 8% of emissions in 2020.

The cap will also help curb China’s already high reliance on imported crude oil, which stood at 76% last year.

HOW HAS CHINA’S REFINERY SECTOR GROWN?
Refining capacity in China increased last year to 920 million metric tons per year, or 18.4 million bpd.

The industry’s recent growth has been driven since 2019 by the creation of three large independent refiners – Zhejiang Petrochemical, Hengli Petrochemical and Shenghong Petrochemical – adding a combined 1.52 million bpd capacity that is highly integrated with petrochemicals making.

Together with dominant state refiner Sinopec and its rival PetroChina, as well as an army of about 60 smaller independent processors known as “teapots”, the refining sector has ballooned into the world’s largest, surpassing the United States last year.

That growth has resulted in a low refinery utilization rate of 73% in 2022, based on official output data, compared with more than 91% in the U.S., which means China has surplus capacity to allow for large volumes of refined fuel exports.

WHAT IS THE LIKELY IMPACT OF THE MEASURES?
The measures could force more closures of small, inefficient plants, which have already taken place in teapot hub Shandong province, where some 400,000-bpd worth of capacity was mothballed in 2020 and 2021 to make way for the new Yulong Petrochemical plant of a similar size.

Others players are expected to look abroad for growth. Polyester fiber maker Tongku Group and Rongsheng Petrochemical are both exploring building new refineries in Southeast Asia.

Many teapots, meanwhile, have over the years quietly expanded processing capacity, invested in oil storage or moved up the product value chain to make energy transition chemicals.

WILL CHINA ACHIEVE ITS GOALS?
Apart from increasing scrutiny in approving new plants, the government can wield the powerful tool of crude oil import quotas, to which all independent refiners are subjected.

In recent years, the cap has stood at an annual 243 million tons, or 4.86 million bpd and actual grants have run below that.

Thanks to rigid quota management and crackdowns on illegal quota trading, China has already managed to limit refinery operations to some extent.

Meanwhile, the government also maintains tight control over refined fuel exports, allowing only state refiners and one independent major refiner, Zhejiang Petrochemical Corp, the right to export.

WHICH ARE CHINA’S BIGGEST REFINERS?
China has about 34 refineries of 200,000 bpd or more, with combined processing capacity of 480 million tons, or 9.6 million bpd, according to Sinopec.

Most of these plants are run by Sinopec , PetroChina and China National Offshore Oil Company. Together, the three state giants operate nearly 12 million bpd of processing capacity.

HOW MUCH NEW CAPACITY IS IN THE PIPELINE?
Four new refineries with combined capacity of 1.2 million bpd are planned, including the 400,000 bpd Yulong Petrochemical complex in Shandong, the 300,000-bpd Huajin Aramco Petrochemical Company in Liaoning province in the northeast, and the 320,000-bpd Sinopec Gulei refinery, as well as the 300,000-bpd expansion at Sinopec Zhenhai.

Reuters, Chen Aizhu, November 20, 2023