Oil Refining
China in now dependent on importing 40% of its crude oil, most of which comes from the Middle East and is high in sulfur. China has a limited capacity to process high-sulfur crude oil. As the average sulfur content of its imports grows, China plans to reduce the allowable sulfur in final products. The capital investments needed for sulfur reduction are high and must meet other environmental goals as well, such as aromatics and olefins reduction. The refining industry has resisted rapid improvement in product quality because of the costs, but had no studies to indicate the impact of moving to Euro II, III or IV levels of product quality.
Fuel Quality in China
High allowable sulfur in Chinese fuels contributes heavily to urban air pollution. Controlling vehicle tailpipe emissions must be matched by improvements in fuel quality. Currently, China lags other countries in sulfur control as illustrated below.
The goal of our refining study was to provide quantitative estimates of the capital cost impact on Chinese refiners of raising gasoline and diesel fuel quality to a range of Euro specifications, and to provide recommendations on possible technology upgrade routes to minimize costs. The study includes the development a linear programming (LP) model of Chinese refining system, and the development of 10 scenarios for product quality improvement, including Euro V (most stringent) by 2010. Results show a modest increase in capital costs per gallon of gasoline or diesel (∼5¢) to move to Euro V (30 ppm sulfur in diesel, 20 ppm gasoline) quality standards.