China approved a $20 billion petrochemical project in eastern Shandong province, Reuters reported on Tuesday, citing two industry sources familiar with the approval process.
China’s National Development & Reform Commission (NDRC) approved the Shandong Yulong Petrochemical project on Monday, Reuters’ sources said.
The project, which includes a 400,000 barrel-per-day refinery and a 3 million tonne per year ethylene plant, was proposed years ago but met delays in approval due to concerns over excess refining capacity, Reuters said.
The project is located in China’s hub for independent oil refineries.
Some independent refiners in Shandong have struggled in recent months after huge refineries such as Hengli Petrochemical and Zhejiang Petrochemical began operations last year.
The Shandong Yulong Petrochemical project, while helping China’s petrochemicals industry by reducing imports, could exacerbate the glut of refined petroleum products in the country, according to Reuters.
Shandong Nanshan Group, a private aluminum smelter based in Yantai, northeastern Shandong, will serve as the lead investor of the project, Reuters reported, citing China business registration data.
Chemical group Wanhua and the Shandong provincial government will be investing as well, Reuters said, citing one of the sources.