It is reported that Yanchang Petroleum (Shaanxi Yanchang Petroleum (Group) Co., Ltd.), a state-owned energy company based in Shaanxi Province, China, has made a series of recent advances on its Yan’an 10-million-ton-per-year refining-chemical integration transformation and upgrade project. The total investment is reported at approximately RMB 80.29 billion, with related news reported on August 11, 2026.
The project reportedly involves constructing a new 10-million-ton-per-year atmospheric and vacuum distillation facility along with a new 1.2-million-ton-per-year ethylene facility, while closing and consolidating approximately 12.4 million tons per year of aging refining capacity located in Yan’an, Yulin, and other areas, under a strategy known as “reducing oil, increasing chemicals” (減油增化, a strategy of reducing the share of refined petroleum products while increasing the share of chemical products). Through this, the ratio of petroleum products to chemical products is reportedly targeted to shift from 9:1 to 5:5. In addition, CCUS (Carbon Capture, Utilization and Storage) facilities are reportedly planned to be installed alongside the project. However, the specific process licenses or catalyst technologies to be applied to the integrated refining-chemical facilities have not been disclosed.
The total investment is approximately RMB 80.29 billion, and upon completion, the project is expected to generate annual revenue of RMB 58.7 billion and profit and tax of RMB 19.1 billion, while creating more than 3,800 jobs, according to reports. Recent progress includes the official commissioning on August 3, 2026 of a 1-million-cubic-meter Yan’an crude oil storage facility, built with an investment of RMB 2.1 billion, along with the opening of a 17-kilometer pipeline with an annual design capacity of 10 million tons. This was followed by Shaanxi Botian winning the feasibility study service contract for a supply gas pipeline on August 4, and a project advancement meeting held on August 5, according to reports.
This project is regarded as a representative example of the broader trend across China’s refining industry toward reducing the share of refined petroleum products while expanding chemical production, reflecting the direction of structural adjustment in China’s petrochemical industry through the simultaneous consolidation of aging refining facilities and construction of large-scale new ethylene capacity. The phased approach of first commissioning basic infrastructure such as the crude oil storage facility and pipeline, followed by the integration of refining and chemical facilities, is also notable. This is understood as an approach aimed at reducing the permitting, site-development, and infrastructure-construction delay risks commonly faced by large refining-chemical integration projects.
The continued advancement of large projects shifting business structures from refining-centered to chemical-centered operations raises concerns about oversupply of basic petrochemical feedstocks such as ethylene, while also potentially affecting demand for related equipment, materials, and licensed technologies across the supply chain. In particular, the approach of consolidating aging small-scale refining facilities into a large integrated complex is seen by some as a reference case that could be cited in the restructuring processes of refiners in other regions going forward. It is also noted that the parallel adoption of CCUS facilities reflects a trend in which carbon-reduction technology is becoming a standard component of large-scale refining-chemical projects.
Attention is focused on the schedule for the actual consolidation of refining facilities and the start of ethylene facility construction following the commissioning of the Yan’an crude oil storage facility and pipeline, and on when specific plans for CCUS facility deployment will be disclosed.