Shandong Teapot Refinery Capacity Is Rising, Group Says

Privately owned refineries in Shandong province may import about 10 million tons of fuel oil annually in the next two to three years, about the same as now, according to a trade association.

Total capacity for Shandong teapot refineries is about 90 million tons a year and is rising by 6 million to 7 million tons annually, Yu Yuhua, vice secretary general of the Shandong Fuel Oil Association, said today in an interview. About a third of the total capacity is operating because of high crude and fuel oil costs, he said.

No teapot refineries with capacity of less than 2 million tons a year has been shut under a government rule, he said.

A Chinese government drive to curb pollution and improve energy efficiency will shut private refineries, known as teapots, that process fuel oil into lighter products. Refineries with a capacity of less than 2 million tons a year will be shut by the end of 2013, the National Development and Reform Commission, the nation’s top economic planner, said April 26.

That would “theoretically” cut 80 percent of the total 130 million-ton capacity of the refineries, Zhu Jiasheng, an analyst with C1 Energy, a Shanghai-based commodity researcher, said in December. Some processors will expand to avoid closure, he said.

To contact Bloomberg News staff for this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net

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