In-depth comparison of China’s and the U.S.’s petrochemical industries: refining and ethylene sectors, business models, petrochemical projects, etc.

Stage 1: Domestic self-reliance. Between 2005 and 2015, China’s two major state-owned oil companies—CNPC and Sinopec—expanded their refining and petrochemical operations. For example, Maoming Petrochemical increased its ethylene capacity from 360,000 tons/year to 1,000,000 tons/year in 2006; Zhenhai Petrochemical commissioned a new 1,000,000-ton/year ethylene plant in 2010; and CNPC’s Dushanzi Petrochemical and Sichuan Petrochemical both achieved integrated refining-and-petrochemical scale. Stage 2: Rise of private-sector mega-refineries. Since 2016, large-scale private refineries—led by Hengli Petrochemical, Rongsheng Petrochemical, Hengyi Petrochemical, and Dongfang Shenghong—have emerged. Leveraging imported advanced process packages for large-scale capacity expansion, combined with advantages in domestic equipment localization, these enterprises have reduced capital expenditures through concurrent detailed engineering and construction. Moreover, they optimize internal integration between fuel products and chemical products within their refining-and-petrochemical complexes, thereby lowering raw material and utility costs. 3. Comparative analysis of China’s and the U.S.’s petrochemical industries: strong complementary advantages (1) Comparison of refining and ethylene sectors in China and the U.S. U.S. refineries are relatively fragmented in terms of ownership but geographically concentrated—primarily in the Gulf Coast region. In 2019, the U.S. operated 135 refineries with a total capacity of 18.8 million barrels per day (approximately 940 million tons/year), averaging 6.96 million tons/year per refinery. Key distinguishing features of the U.S. refining industry relative to China’s include: • Ownership is relatively diversified—comprising both integrated oil & gas companies and independent refiners. Major U.S. refiners today include Marathon Petroleum (MPC) and Valero Energy (VLO), which focus exclusively on refining and finished-product marketing. Meanwhile, integrated energy majors such as ExxonMobil, BP, and Chevron also participate in refining and ethylene businesses. Only LyondellBasell (LYB) and Phillips 66 (PSX) operate both refining and ethylene businesses at scale. • Frequent mergers and acquisitions among U.S. refineries have driven industry consolidation. Examples include: Amoco, SOHIO, and ARCO refineries now falling under BP; Mapco, Williams, Orion, and Clark Refining merging into Valero Energy; and Marathon Petroleum’s 2019 acquisition of Tesoro Corp., making it the largest U.S. refiner. By contrast, China’s average refinery size remains comparable to that of U.S. refineries in the 1980s. Between 1982 and 1985, the number of U.S. refineries declined from 320 to 223; by 2018, it had further dropped to 135. Total U.S. refining capacity fell to 790 million tons/year in 1985 and remained flat for over a decade thereafter. • Refineries cluster heavily in the Gulf Coast region, where supporting infrastructure, logistics networks, and industrial division of labor are well established. • The largest U.S. refinery today is Motiva Enterprises’ Port Arthur, Texas facility—owned by Saudi Aramco—with a capacity of 30.15 million tons/year. • The U.S. Gulf Coast is one of the world’s largest refining-and-petrochemical production bases, accounting for approximately 52.5% of total U.S. refining capacity (roughly 460 million tons/year) and over 95% of U.S. ethylene capacity (exceeding 27 million tons/year). • Pipeline infrastructure around U.S. refineries is highly developed. Additionally, U.S. refineries feature relatively high complexity factors, with strong coking and hydrocracking capabilities; hydrogen used in refining is predominantly purchased externally, with minimal on-site hydrogen production.

Global top four heavy-chemical integrated enterprises: Formosa Plastics, India’s Reliance Industries, LyondellBasell, and Phillips 66

2002: Acquired a 26% stake in Indian Petrochemicals Corporation Limited (IPCL); subsequently raised its shareholding to 46% via open offers. 2007: Shareholders approved a $3 billion investment in Jamnagar to construct an integrated petrochemical complex with 2 million tons/year of product capacity. March 2007: Reliance Industries Limited (RIL) and IPCL’s boards jointly approved the merger of IPCL into RIL. 2009: Boards of RIL and Reliance Petroleum Limited (RPL) approved RPL’s merger into RIL. April 2015: Commissioned a 1.5-million-ton/year purified terephthalic acid (PTA) plant at Dahej, raising RIL’s total PTA capacity to 3.1 million tons/year—accounting for roughly 4% of global PTA capacity. June 2017: Commissioned the third paraxylene (PX) production line at Jamnagar, doubling RIL’s PX capacity and elevating it to the world’s second-largest PX producer—accounting for approximately 11% of global PX output. January 2018: Commissioned a 1.5-million-ton/year refinery off-gas cracking (ROGC) ethylene unit, bringing RIL’s total ethylene capacity close to 4 million tons/year across five production sites. August 2019: Saudi Aramco announced plans to acquire a 20% equity stake in Reliance, valuing the company at USD 75 billion. Figure 6: Reliance’s net profit C. Historical development of LyondellBasell LyondellBasell (LYB) traces its origins to the founders of Ziegler-Natta catalyst technology and is currently one of the world’s largest plastics, chemicals, and refining enterprises. At year-end 2010, following corporate restructuring, LYB held two refining assets totaling 373,000 barrels/day (approx. 18.65 million tons/year); total ethylene capacity stood at 16 billion pounds/year (approx. 7.4 million tons/year), including 9.6 billion pounds/year in North America, 5.5 billion pounds/year of propylene, and 1.1 billion pounds/year of butadiene; outside the U.S., ethylene capacity totaled 6.4 billion pounds/year, propylene 5.4 billion pounds/year, and butadiene 550 million pounds/year. Capital expenditures have consistently focused on revamps and expansions. 1989: Lyondell was spun off from ARCO and became an independent, NYSE-listed company. 2000: BASF and Shell formed a 50/50 joint venture named Basell. 2001: Basell commissioned the world’s largest single-line LDPE plant (320,000 tons/year) in Berre, France. 2004: Lyondell acquired Millennium Chemicals Inc.; Equistar also became Lyondell’s wholly owned subsidiary. 2006: Lyondell acquired CITGO’s interest in Houston Refining LP (formerly LCR). 2007: Basell merged with Lyondell to form LyondellBasell Industries. 2010: The merged entity listed on the NYSE under ticker symbol LYB.

Valero to acquire former LyondellBasell Houston oil refinery, restart 165,000 b/d by end-2027

1 day ago

Valero Energy Corp plans to acquire a former LyondellBasell Houston refinery for $320.5 million, restarting 165,000 b/d of crude processing by 2027. The acquisition adds storage and logistics infrastructure to Valero's US Gulf Coast refining system.

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