The US Treasury’s latest sanctions targeting a major Chinese crude oil terminal have caused immediate operational disruptions for the state-owned refining group Sinopec, impacting its crude import logistics and refinery output.
Target of the Sanctions
The sanctions were placed on the Rizhao Shihua Crude Oil Terminal at the port of Rizhao in Shandong province.
- Ownership: The terminal is a significant facility, half-owned by a Sinopec logistics unit.
- Significance to Sinopec: Industry executives and analysts estimate that one-fifth of Sinopec’s crude oil imports pass through this terminal.
- Reason for Sanction: The U.S. stated that the terminal was designated for receiving Iranian oil on board vessels that were already under sanctions.
Sinopec’s Operational Response
In the wake of the US announcement, Sinopec took swift action to adjust its supply chain and refining operations.
- Supertanker Diversion
- The supertanker New Vista, chartered by Sinopec’s trading arm Unipec, was forced to change its destination over the weekend.
- The vessel, carrying 2 million barrels of Abu Dhabi’s Upper Zakum crude, was originally scheduled to discharge at Rizhao but was rerouted to the ports of Ningbo and Zhoushan.
- Refinery Rate Cuts
- Sinopec reportedly instructed about half a dozen subsidiary refineries that receive crude oil from the sanctioned terminal to cut their operation rates to 80% for the rest of October.
- One consultancy estimated that Sinopec’s total October crude processing runs may drop by 3.36% from earlier plans, to approximately 5.16 million barrels per day.
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Source: Reuters
