China's state-owned energy giant, CNOOC, is poised to significantly alter the nation's petrochemical landscape with the substantial expansion of its Daxie refinery. A $2.7 billion upgrade, focused on boosting crude processing capabilities and increasing the production of vital petrochemical products, is set to solidify CNOOC's position as a key player in the global chemical industry.

The centrepiece of this expansion is a 50% increase in crude processing capacity, bringing the refinery's output to 240,000 barrels per day (bpd). This surge in capacity is driven by the addition of a 120,000-bpd crude unit, alongside a suite of advanced processing units. The inclusion of a 3.2 million-tonne per year catalytic cracker, a 2 million tpy hydrocracker, and a 2.4 million tpy continuous reformer signifies a strategic shift towards higher-value petrochemical production.

These additions translate to a significant increase in the availability of crucial feedstocks. The catalytic and hydrocracking units are designed to break down heavier crude fractions into lighter, more valuable components, including propylene and other olefins. These are essential building blocks for a wide range of products, from plastics and synthetic fibres to advanced polymers.

The installation of two 450,000 tpy polypropylene production units further underscores CNOOC's commitment to expanding its petrochemical footprint. This move will enhance domestic supply of this vital polymer, reducing reliance on imports and providing a more stable source for downstream manufacturers. The 2.4 million tpy reformer will bolster the production of aromatics, notably benzene, toluene, and xylene (BTX), which are fundamental to numerous chemical processes.

CNOOC's strategic modernization extends beyond processing units. The mothballing of an older, less efficient crude unit alongside the new additions demonstrates a focus on optimizing operational efficiency. This ensures the refinery operates with greater agility and cost-effectiveness, potentially leading to more competitive pricing for its petrochemical outputs.

Complementing the refining expansion is the construction of a 5 million cubic meter underground oil storage facility, scheduled for completion by 2027. This storage capacity will provide a crucial buffer against market volatility, ensuring a stable feedstock supply for the refinery and, consequently, a consistent output of petrochemical products.

This multi-faceted expansion at Daxie signals a broader trend within China's petrochemical industry: the integration of refining and petrochemical operations. CNOOC's investment aims to enhance domestic self-sufficiency, reduce reliance on imported feedstocks, and strengthen its position in the global market. This development will undoubtedly reshape supply chains and influence pricing dynamics for key petrochemicals, demanding that chemical companies adapt to the evolving landscape.