The 16 million mt/year refinery has purchased 2 million barrels of Upper Zakum crude for July loading from Vitol at high $4/b against the Platts Dubai, trade sources said.
This is Shenghong's first cargo purchase in 2022, as it holds 7.95 million mt of crude import quotas for the year.
The refinery has recently started feeding crude oil into its 16 million mt/year new crude distillation unit as the initial step before a startup.
But a full startup is not expected until second-half 2022, because the refinery's secondary units are not completely ready yet, a source with knowledge of the matter said. Slow domestic demand for oil and petrochemical products also discourages its startup, sources said.
Shenghong in late 2021 imported about 565,000 mt of crude oil, comprising Russian ESPO and Arabian crudes from Saudi Arabia, with 2 million mt of crude import quotas awarded for the year.
Located in the coastal city of Lianyungang in Jiangsu province, the refinery currently takes VLCC crude cargos mainly from Qingdao and Rizhao ports in the neighboring Shandong province, as its own VLCC berth is not ready yet.
The complex that started construction in December 2018 had some core facilities delivered on June 30, 2021, including a CDU, sulfur recovery units, naphtha hydrocracker and crude tanks.
The complex targets supplying paraxylene to Honggang Petrochemical and Shenghong purified terephthalic acid plants in Lianyungang. Honggang supplies PTA to Shenghong Group's 2.2 million mt/year polyester plant in the same province.