China's Hengli Petchem to test new oil refinery

SINGAPORE (Reuters) - China’s Hengli Petrochemical Group (600346.SS) will start test-running its new oil refinery in the northeastern city of Dalian on December 15, according to a company statement, slightly behind an earlier timeline of around the end of November.

Once operational, Hengli will become the country’s first privately owned refinery and chemical complex. With a refining capacity of 400,000 barrels per day (bpd) of crude oil, the site will rival the largest oil refineries in China, the world’s biggest importer and second-largest consumer of oil.

“Hengli has completed building the 20 million ton per year refinery and chemical complex, with public utilities and auxiliary facilities also ripe for operations,” the firm said in a statement posted on its social media platform late on Wednesday.

Diesel fuel will first be injected into the pipes to run through the facilities, before crude oil is fed into the distillation tower about a week to 10 days later, said an industry source involved in the test operation.

A total of 500,000 tonnes of Saudi crude oil will be used for experimental operations for about 20 days, said the source, who declined to be named as not authorized to speak to press.

It normally takes several months for a new refinery to begin stable operations after test runs.

Hengli has agreed to buy 130,000 bpd of crude oil from state-owned Saudi Aramco under an annual supply agreement for 2019, becoming a new major customer for Saudi Arabia which competes with Russia for the top spot in oil sales to China.

Zhejiang Petrochemical Corp, controlled by private chemical group Rongsheng Holdings, is expected to start partial test operations at some units around end of this year and early 2019 at its similar-sized complex.

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