Entity

Yulong Island Petrochemical Park | Source: Tialoc Group (March 2024)

Shandong Yulong Petrochemical Co., Ltd. (山东裕龙石化有限公司), established on June 28, 2019 with a registered capital of RMB 38 billion, operates a major integrated refining and petrochemical complex located on Yulong Island in Longkou City, Yantai, Shandong Province, China. The company was conceived as a strategic consolidation effort by Shandong Province to upgrade its fragmented independent refining sector, replacing 26.96 million tons per year of decentralized capacity from smaller "teapot" refineries with a large-scale, technologically advanced integrated facility.

The company is jointly owned by private and state-backed entities. Nanshan Group Co., Ltd., a private conglomerate primarily active in aluminum smelting, holds the controlling majority stake at 51%, while the provincial government-backed Shandong Energy Group Co., Ltd. owns 46.1%, with the remaining shares held by two local enterprises. This mixed-ownership structure reflects the project's strategic importance as both a provincial industrial transformation initiative and a commercial venture.

Phase I of the Yulong Island Refining and Chemical Integration Project — a key component of China's 14^th Five-Year Plan — was launched in October 2020 with a total approved investment of RMB 116.8 billion (approximately USD 16–17 billion). Phase I encompasses 20 million tonnes per year (Mt/y) of crude oil refining capacity, 3 Mt/y of ethylene production, and 3 Mt/y of mixed xylene capacity, complemented by an extensive portfolio of downstream polyolefin, elastomer, and specialty chemical units. Both crude distillation units (CDUs) are fully operational as of 2025, with the broader petrochemical complex progressively coming online throughout 2025 and into 2026.

In October 2023, Saudi Aramco signed a Memorandum of Understanding with Nanshan Group, Shandong Energy Group, and Shandong Yulong Petrochemical to facilitate discussions regarding the potential acquisition of a 10% strategic equity interest in the company, alongside potential crude oil and feedstock supply arrangements. As of April 2026, this transaction has not been finalized, and no public announcement of regulatory approval or completion of due diligence has been made.

In October 2025, Shandong Yulong Petrochemical was designated as a sanctioned entity by both the United Kingdom (October 15, 2025) and the European Union (October 23, 2025) on the grounds of supporting the Russian energy sector. As a direct consequence, a number of Western crude oil suppliers cancelled contracted deliveries, and several Western technology partners and financial institutions moved to exit their commercial relationships with the company. In response, the company pivoted its crude procurement strategy toward Russian crude oil, sourcing approximately 350,000 barrels per day from Russian suppliers to sustain operations. The sanctions represent a significant geopolitical development affecting the company's supply chain, financing relationships, and international partnerships.

Looking ahead, Shandong Yulong Petrochemical is advancing a major downstream and extended industrial chain project with a total investment of RMB 117.8 billion (approximately USD 16 billion), encompassing 56 production units targeting high-value petrochemical new materials including polyolefin elastomers (POE), nylon 66, nylon 6, carbon fiber, PTA, MMA, PMMA, BDO, PBS, and biodegradable plastics. Land reclamation works for this project commenced in early 2026, with full commissioning targeted by 2029. This expansion would position Yulong as one of China's most comprehensive integrated refining-to-advanced-materials complexes, with a combined Phase I and Phase II investment exceeding RMB 234 billion (approximately USD 32 billion).

Sources

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