July 13, 2018 / 3:38 AM / 7 months ago

Shandong refiner Haiyou extends crude unit shutdown indefinitely - sources

BEIJING, July 13 (Reuters) - Independent Chinese refiner, Shandong Haiyou Petrochemical Group, has no definite plan to reopen its crude oil distillation unit (CDU) after shutting it down sometime in late May, two industry sources with knowledge of the plant’s operation said on Friday.

The plant, in the city of Rizhao in Shandong province, owns a CDU with a capacity of around 70,000 barrels per day (bpd), which it shut down after a local government order to cut down pollution ahead of a regional summit in June, the sources said.

Haiyou, however, will keep open its 1 million tonne-per-year delayed coker, a unit that processes residual fuel oil into lighter refined products such as diesel and gasoline, said one of the sources.

Falling profit margins following Beijing’s move to tighten tax rules for independent oil refiners and blenders could be one reason for Haiyou’s extended shutdown, the two sources said.

Haiyou’s large debt burden could be another reason as the plant struggles to secure financing for oil purchases, said the second source, who has knowledge of the plant’s financial status.

Haiyou has an annual crude oil import quota of 3.2 million tonnes.

Both sources declined to be named as they are not authorized to speak to press. Multiple calls to the company went unanswered. (Reporting by Chen Aizhu; Editing by Christian Schmollinger)

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