POE Overcapacity Alarm Sounds! PetroChina Dalian's 200,000-ton Project Moves Forward Against the Trend

POE, or Polyolefin Elastomer, is a random copolymer made from two monomers, ethylene and alpha-olefins. The structure of POE gives it high elasticity and toughness at room temperature, and it can also be plasticized and shaped at high temperatures. It has thermal reversibility, excellent mechanical properties, weather resistance, and processing rheological properties. In addition, POE has good compatibility with polyolefin materials, effectively enhancing low-temperature toughness and offering a high cost-performance ratio. Therefore, it is widely used in photovoltaic cells, automotive parts, aerospace, 5G/6G communications, and other fields, significantly impacting traditional rubber and plastic materials.

According to statistics, the current planned production capacity of POE in China has exceeded 4.5 million tons per year, while the estimated demand by 2028 is only 1.95 million tons. From the data, it is clear that there is a significant imbalance between supply and demand, with a serious problem of overcapacity.

project background

The Dalian petrochemical relocation project has a long history. In 2013, the National Development and Reform Commission proposed the establishment of seven major petrochemical industry bases nationwide, and the Dalian Xizhong Island (Changxing Island) Petrochemical Industrial Park became the preferred location for the relocation of Dalian Petrochemical.

On November 20, 2022, a signing ceremony for the cooperation framework agreement on the relocation and renovation project of Dalian Petrochemical of China National Petroleum Corporation was held by the Dalian municipal government, clarifying the construction scale and objectives of the project.

project planning

• Phase one project: The construction of new facilities with an annual capacity of 10 million tons of refining and 1.4 million tons of ethylene, as well as downstream chemical new materials and other "chain extension" projects, actively creating a green, low-carbon, efficient, and new type of integrated refining and petrochemical project.
• Phase II Project: After full completion and commencement of operations, the final capacity on Xizhong Island will be 20 million tons of refining and 2.4 million tons of ethylene, which is roughly equivalent to the current atmospheric distillation capacity of Dalian Petrochemical. After relocation, the ethylene capacity will increase by 900,000 tons.

project significance

• Promote industrial upgrading: The project will strongly promote the transformation and development of Dalian's petrochemical industry towards greener, higher-end, and smarter directions, drive the optimization of layout and industrial upgrading of Dalian's petrochemical industry, and help build a modern industrial system with competitiveness.
• Boosting Regional Economy: The implementation of the project will transform Dalian's petrochemical product structure from being mainly oil processing to expanding into mid-to-downstream high value-added industrial chains, becoming an important economic growth pole for Dalian in the future.
• Enhance industry competitiveness: As the project advances, the international competitiveness and influence of the Dalian Changxing Island (Xizhong Island) Petrochemical Industry Base will rapidly increase, accelerating the cluster development of leading petrochemical projects such as integrated refining and chemical operations, as well as related industrial projects.

supporting facilities construction

• Pier construction: The first phase of the working vessel pier project in the Changxing Island port area of Dalian Port, Zhong Island operation area, has been completed and is about to be put into use. Two ten-thousand-ton liquid piers are under accelerated construction.
• Public utility corridor project: The park plans to construct 13.4 kilometers of public utility corridors, including 10 kilometers of material corridors and 3.4 kilometers of power corridors. Currently, 70% of the material corridors under construction have been completed.
• Road construction: The road project supporting the Xizhong Island Refining and Chemical Industry Park is about to enter the construction phase. East 3rd Street has been successfully completed and opened to traffic, while the extension of East 2nd Street is accelerating the processing of preliminary procedures.

• March 20, Dalian Petrochemical Company (Xizhong Island) Refining and Chemical Integration Project Sea Area Use Argumentation Consulting Service Project Tender Announcement.

• March 19, Dalian Petrochemical Company (Xizhong Island) refining and chemical integration project reclamation engineering environmental impact assessment consulting service tender announcement. The project will newly construct a 10 million tons/year petrochemical refining and 1.4 million tons/year ethylene and its downstream low-carbon olefins comprehensive utilization facility, oil storage and transportation, public utilities, auxiliary facilities, and off-site works. The main plant area is about 630 hectares, mainly utilizing the historical reclamation area in the north of Xizhong Island, with the supporting wharf project using approximately 135.4 hectares of sea area (shore protection reinforcement). The above-mentioned sea use area is subject to the approval of the feasibility study.

• On February 10, the feasibility study report for the integrated refining and petrochemical project of Dalian Petrochemical Company (Xizhong Island), the chapter on the 200,000 tons/year polyolefin elastomer (POE) unit, was directly procured. The sole service provider for direct procurement: Jilin Chemical Engineering Co., Ltd. of CNPC.

• On February 10, the feasibility study report for the integrated refining and petrochemical project of Dalian Petrochemical Company (Xizhong Island), including the sections on the 1#400,000 tons/year PP unit, 1#450,000 tons/year FDPE unit, and 2#450,000 tons/year FDPE unit, was directly procured. The sole service provider for direct procurement: China Huanqiu Engineering Corporation.

• On February 10, the Dalian Petrochemical Company (Xizhong Island) Refining and Chemical Integration Project's feasibility study report for the 300,000 tons/year CHPPO unit chapter volume preparation negotiation and procurement project was tendered.

• November 16, 2024, the preliminary feasibility study of the Xizhong Island refining and chemical integration project by Dalian Petrochemical Company was approved by the Group Corporation.

• On October 28, 2024, the official website of Dalian Municipal Government announced that the relocation of Dalian Petrochemical has hit the "acceleration key," and the construction of supporting roads for the Xizhong Island Refining and Chemical Industry Park, where it is about to move into, has started.

• On April 11, 2024, the team from China Huanqiu Contracting & Engineering Corporation Beijing Branch, the unit responsible for preparing the environmental impact assessment report for the PetroChina Dalian Petrochemical (Xizhong Island) Refining and Chemical Integration Project, went to the Xizhong Island Petrochemical Industry Base. They conducted a field survey of the project site and held a symposium to understand the materials needed for the preparation of the environmental impact assessment report. Wu Junfeng, Deputy Secretary of the Party Working Committee and Deputy Director of the Management Committee, attended the symposium.

• In March 2024, with a total investment of 68.5 billion yuan, the agreement for the relocation and upgrade project of PetroChina Dalian Petrochemical was officially signed.

• On the morning of March 10, 2023, Ren Lixin, member of the Party Leadership Group and Deputy General Manager of China National Petroleum Corporation, inspected the progress of the supporting infrastructure construction for the Xizhong Island Refining and Chemical Project.