CNPC to Restart Dalian Refinery for Processing Russian Oil

• The Dalian refinery closure displaced hundreds of workers who could be reinstated; the restarted unit will process approximately 120,000-140,000 bpd (6-7 million metric tons annually)
• Russia's ESPO Blend crude trades at an $11 per barrel discount to rival Brazilian oil, creating attractive profit margins that are driving the restart decision
• CNPC could resume spot purchases of Russian seaborne oil cargoes within a couple of months, reversing the October 2025 halt triggered by U.S. sanctions on Rosneft and Lukoil

Summary: CNPC to Restart Dalian Refinery for Processing Russian Oil

China National Petroleum Corporation (CNPC) plans to restart operations at its Dalian refinery in northeastern China, months after shuttering the facility, to capitalize on discounted Russian crude oil margins. The decision will enable CNPC to resume seaborne Russian oil purchases, which were halted in October 2025.

Key Details:

The Dalian Petrochemical refinery, with 410,000 barrels per day (bpd) capacity, was closed in July 2025 as part of Beijing's initiative to reduce excess refining capacity. CNPC now intends to restart the 200,000-bpd crude distillation unit around mid-2026, with plans to process approximately 120,000 to 140,000 bpd (6-7 million metric tons annually).

The refinery was previously one of PetroChina's largest and most profitable facilities and a major processor of Russian ESPO Blend crude. It remains unclear whether the plant will process Russian oil via the East Siberia-Pacific Ocean Pipeline or by sea.

Market Implications:

The move underscores China-Russia strategic cooperation and demonstrates Beijing's continued support for Moscow. The decision is driven by attractive economics: Russian ESPO blend trades at an $11 per barrel discount to Brazilian crude, creating compelling margins for Chinese refiners.

China's state energy firms ceased Russian oil purchases in October 2025 following U.S. sanctions on major Russian producers Rosneft and Lukoil. One source indicated CNPC could resume spot Russian cargo purchases within months.

Additional Factors:

The restart requires approval from China's National Development and Reform Commission, which originally ordered the permanent closure. The decision will also reinstate jobs for hundreds of displaced workers from the initial shutdown.