China’s state planner has given the initial go-ahead for a $20 billion refinery and petrochemical project to be built on the country’s east coast in Shandong province.

What Happened

The Shandong provincial government has got the initial approval from China’s National Development & Reform Commission (NDRC) to commence planning a 400,000 barrel-per-day (bpd) refinery along with a 3 million tonne-per-year ethylene plant in Yantai, two sources revealed to Reuters.

Why It Matters

The demand for oil in China has almost rebounded to pre-pandemic levels, reported Business Insider.

Consumption reached 13 million barrels per day in May, whereas in December it was 13.7 million barrels.

Gasoline and diesel are spurring the high demand, while demand for jet fuel remains sluggish.

China’s independent refiners are called “teapots.” They have raised crude processing capacity to 75% in 2020 compared with 60% a year ago.

The robust demand for oil in China is bolstering oil prices, which had turned negative in April, with Brent crude futures for June trading at $16.78, the lowest levels since 1999.

Price Action

WTI Crude July futures traded 0.82% higher at $35.73, while Brent Crude August futures traded 1.17% higher at $39.31 on Tuesday at press time.

Image Credit: Wikimedia.

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