PetroChina Greenlights Massive Dalian Refinery and Petrochemical Complex

In a decisive step that marks a new chapter in China’s refining strategy, PetroChina has committed nearly 68.5 billion yuan (approximately US $9.6 billion) to build a state-of-the-art integrated refinery and petrochemical complex on Changxing Island, off the coast of Dalian in northeastern China. The facility will incorporate a 200,000 barrels-per-day crude oil refinery, along with a 1.4 million tons-per-year ethylene steam cracker. Complementing this are downstream units for high-value chemical production including polyethylene, polypropylene, and polyolefin elastomers, underscoring a clear shift toward petrochemical-centric refining.

A Strategic Exit from Legacy Infrastructure

The investment follows the methodical closure of PetroChina’s aging Dalian Petrochemical plant, a 410,000 bpd facility that once accounted for nearly 3% of China's refining capacity. The plant's final crude unit was shut down on June 30, and all remaining refined fuel stocks are expected to be cleared by the end of August. This shutdown reflects not just an infrastructure upgrade but a deliberate move away from traditional refining practices anchored in outdated urban environments.

Realigning with Energy Transition and National Priorities

PetroChina’s move is deeply aligned with broader national imperatives. As China faces declining domestic demand for traditional transportation fuels, driven by an economic slowdown and the accelerating adoption of electric vehicles, the strategic value of mega-refineries geared toward high-margin petrochemicals has grown significantly. The new complex reflects a pivot toward value-added production and is in line with China’s objectives to curb industrial overcapacity and cut greenhouse gas emissions.

Safety, Sustainability, and Coastal Relocation

Relocating refinery operations from densely populated urban centres to more remote coastal zones is a calculated risk mitigation strategy. The Changxing Island site allows PetroChina to modernize its operational footprint while addressing public safety and environmental concerns. The older Dalian plant, located in a downtown district, had long been under scrutiny for its proximity to residential areas. In contrast, the new facility offers space, safety buffers, and logistical advantages, particularly concerning maritime access and export infrastructure.

Construction Advances as Commitment Becomes Reality

Despite the absence of a formal public announcement, early signs confirm that PetroChina has crossed key investment thresholds. Construction activity is already visible, with jetty works and pipeline linkages under way, strong indicators that final approvals and financial commitments have been fully secured. The pace of progress suggests that the project is not only real but also a high priority in the company’s long-term transformation agenda.