BY COMFORT OGBONNA
Chinese state oil giant China National Petroleum Corp (CNPC) is planning to restart a key unit at its refinery in the northeastern port city of Dalian, months after shutting the facility, as it looks to capitalise on strong margins from processing discounted Russian crude, according to multiple people familiar with the matter.
The decision marks an unexpected shift after operations were halted last year and will pave the way for CNPC to resume purchases of seaborne Russian oil, which were suspended in October. Several sources said the restart highlights Beijing’s continued support for Moscow, following pledges by the two neighbouring countries late last year to deepen cooperation in the energy sector despite growing international pressure on Russia.
PetroChina, the listed arm of CNPC, closed the 410,000-barrel-per-day Dalian Petrochemical refinery in July as part of a broader restructuring plan. The closure aligned with government efforts to curb excess refining capacity and shift the industry’s focus toward higher-value petrochemical production. The company had announced plans to invest about $10 billion in a new integrated refining and chemicals complex on nearby Changxing Island.
According to trade and industry sources, CNPC is now preparing to restart a 200,000-barrel-per-day crude distillation unit at the Dalian site. Three people familiar with the plan said the unit could resume operations around the middle of the year, though the timing remains subject to regulatory approval. The plan has not been made public, and those briefed on the matter declined to be identified.
Any restart will require endorsement from China’s National Development and Reform Commission, which had previously ordered the refinery to be permanently shut. Approval from the top economic planning body would signal a notable policy adjustment, particularly given Beijing’s stated objective of reducing overall refining capacity. CNPC and PetroChina did not respond to requests for comment, and the NDRC has also remained silent on the matter.
Before its closure, the Dalian refinery was one of PetroChina’s largest and most profitable plants and a major processor of Russian crude. It regularly handled ESPO Blend oil delivered through the 4,070-kilometre East Siberia–Pacific Ocean pipeline. Sources said it remains unclear whether the restarted unit would rely on pipeline supplies, seaborne cargoes, or a combination of both.
Chinese state-owned energy firms largely halted purchases of Russian oil cargoes after the United States imposed sanctions in October on Russia’s two largest producers, Rosneft and Lukoil. However, people familiar with CNPC’s thinking said the company is likely to resume buying spot Russian cargoes within the next couple of months if the restart proceeds as planned.
One source said the refinery is expected to process roughly six to seven million metric tons of crude per year, equivalent to about 120,000 to 140,000 barrels per day, though the duration of operations has not been specified. In addition to Russian oil, the facility could also process other crude grades deemed sufficiently cheap to deliver attractive margins.
Traders noted that the wide price gap between Russia’s ESPO Blend and other competing crudes has been a powerful incentive. ESPO has recently been trading at around $11 per barrel below comparable Brazilian grades, a discount that is difficult for large Chinese refiners to ignore in a market where margins are under constant pressure.
Beyond commercial considerations, the restart would also have social and operational benefits. Three sources said CNPC has taken into account the opportunity to reinstate hundreds of jobs that were lost when the Dalian refinery was closed, easing the impact on workers and the local economy.
If approved, the move would underscore China’s pragmatic approach to energy security and cost management, even as geopolitical tensions and sanctions continue to reshape global oil trade flows.
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