Key Entities and Background Information
The European Union (EU) has included two Chinese refineries and Chinaoil Hong Kong, a commercial branch of PetroChina, in its sanctions list against Russia, as reported by the Official Journal of the EU on Thursday.
Refineries and Company Details
- Liaoyang Petrochemical: A refinery with a capacity of 200,000 barrels per day (bpd) located in northeastern China. It is an integrated refinery and petrochemical plant.
- Shandong Yulong Petrochemical: A relatively new refinery with a capacity of 400,000 bpd and one of China’s largest individual customers for Russian oil.
- Chinaoil Hong Kong: A commercial branch of PetroChina, one of the largest state-owned oil companies in China.
Reasons for Sanctions and Impact
This is not the first time that the EU has included China in its sanctions list, but it is the most significant economically. Alongside the Group of Seven countries, the EU aims to further limit Russia’s means of financing its war in Ukraine through crucial oil and gas revenues.
The EU stated that the three companies were significant buyers of Russian crude, thus providing a “substantial source of income” to Moscow.
Impact on Chinese Refineries
- Shandong Yulong: As one of China’s largest individual customers for Russian oil, this refinery has already seen several crude suppliers cancel sales from Russia and Canada following the UK’s sanctions on the refinery last week.
- Crude Oil Purchases: Shandong Yulong had been purchasing millions of barrels of Russian crude from ESPO and Urals grades. Following the UK sanctions, these suppliers have canceled their sales to the plant.
Additional Sanctions Targeting Russia Evasion
The EU also sanctioned the Chinese company Tianjin Xishanfusheng International Trading Co., which reportedly played a significant role in Russia’s efforts to circumvent sanctions.
Key Questions and Answers
- Who are the newly sanctioned entities? The European Union has added Liaoyang Petrochemical, Shandong Yulong Petrochemical, and Chinaoil Hong Kong (PetroChina’s commercial branch) to its sanctions list against Russia.
- Why were these entities targeted? These companies are significant buyers of Russian crude, providing substantial income to Moscow. The EU aims to further limit Russia’s ability to finance its war in Ukraine through oil and gas revenues.
- What is the capacity of the sanctioned refineries? Liaoyang Petrochemical has a capacity of 200,000 bpd, while Shandong Yulong can process 400,000 bpd.
- How have these sanctions affected crude oil supplies to the refineries? Several crude suppliers have canceled sales from Russia and Canada to Shandong Yulong following the UK’s sanctions on the refinery last week.
- What role did Tianjin Xishanfusheng International Trading Co. play in Russia’s sanctions evasion? The EU sanctioned this Chinese company for its reported significant role in helping Russia circumvent international sanctions.
