Communicator

SRC refinery aerial view | Credit: SRC Facebook page, 23rd Dec 2022

Chevron's move to divest its 50% stake in the Singapore Refining Company (SRC) signals a pivotal strategic recalibration, driven by evolving pressures in Asia's refining landscape. This decision, confirmed in a June 19, 2025 report from Reuters, aligns with a broader industry trend where Western energy giants are streamlining portfolios amid challenging regional economics. The SRC refinery—a 290,000 bpd joint venture with PetroChina—confronts intensifying structural headwinds, including feedstock cost volatility, regional oversupply, and competition from China's integrated refining-petrochemical complexes. These factors, coupled with shrinking margins across Asian refineries, render Chevron's exit both a targeted portfolio optimization and a response to systemic market shifts.

SRC's operational context underscores systemic headwinds.

SRC’s operational context underscores the depth of structural challenges now facing independent refiners in Asia. While the Jurong Island-based SRC refinery is equipped with advanced units such as residue catalytic crackers and hydrocrackers, it must contend with the formidable scale and integration of China’s new mega-refineries. The economics of feedstock procurement have become increasingly unfavorable: Singapore is wholly reliant on imported crude, while Chinese refiners have gained a significant cost advantage by securing discounted Russian oil in the wake of shifting global trade flows. At the same time, China’s aggressive expansion in petrochemical capacity—evidenced by a 25% surge in ethylene output since 2023—has saturated regional markets with olefins, driving down margins for less-integrated players like SRC. These pressures mirror the earlier exit of CPChem—a Chevron group's subsidiary—from its Singapore HDPE joint venture, sold to Aster in 2024 amid similar margin erosion.

Market intelligence signals deeper regional strains.

Recent ppPLUS analyses (Communications #3754, #3812, #3854, , #3879, #3881 and #3885, ) highlight Asia's refining overcapacity, where utilization rates remain below 75% despite regional demand growth. China's export-oriented model exacerbates this; its chemical exports surged 18% year-on-year in Q1 2025, undercutting Singapore-based producers. Meanwhile, SRC's niche—producing ultra-low-sulfur diesel and high-octane gasoline—faces competition from China's integrated refining-chemical complexes, which achieve cost synergies unavailable to smaller players. Chevron's retreat thus exemplifies a strategic pivot away from assets vulnerable to state-subsidized competition.


SRC Refinery Assets | Market Intelligence by ppPLUS

Potential buyers face complex calculus.

PetroChina, as JV partner, holds first-right options but may resist full ownership given SRC's exposure to Chinese oversupply. Private equity firms could pursue carve-outs of SRC's infrastructure (e.g., cogeneration plants or VLCC-capable berths), though regulatory hurdles loom. Alternatively, regional players like Thailand's PTTEP may leverage SRC for feedstock diversification, albeit amid persistent margin uncertainties. The divestment process will test appetite for assets requiring capital-intensive decarbonization upgrades to remain competitive beyond 2030.

This move underscores a broader industry inflection point.

As Chevron joins ExxonMobil and Shell in scaling back Asian downstream exposure, the region's refining model increasingly favors integrated national champions over international operators. SRC's fate will signal whether niche capabilities can offset structural disadvantages against China's cost-advantaged giants.

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Grangemouth oil refinery officially closes after 100 years in operation. Photo credit: yahoo

Grangemouth Refinery Halts Operations: Transition to Import Hub, Calls for Policy Reform, and Strategic Implications for Scotland's Energy Sector.

The end of crude oil processing at Scotland’s Grangemouth refinery marks a pivotal moment for the nation’s industrial and energy landscape. Petroineos, a joint venture between INEOS and PetroChina (CNPC), confirmed in late April 2025 that the site would transition from refining to serving as an import terminal for finished fuels, following sustained financial losses and mounting competition from larger, more efficient refineries abroad. This closure brings an end to more than 70 years of refining at Grangemouth, with the loss of around 400 jobs and significant concern for the local community, which has long depended on the site for stable employment and economic security

The decision has been met with regret and frustration by many in Scotland, including the Scottish Government, which described the closure as premature and detrimental to both the economy and the country’s transition to net zero. Workers and unions have voiced deep concerns about the lack of consultation and the adequacy of transition plans, fearing a repeat of the economic decline seen in other former industrial communities. While some government support for retraining and local investment has been pledged, the loss of Grangemouth’s refining capacity is widely seen as a blow to the region’s industrial fabric and a test of policymakers’ commitment to managing the energy transition responsibly.

Against this backdrop, INEOS Chairman Sir Jim Ratcliffe has been outspoken in his criticism of the UK’s energy and environmental policies. Ratcliffe argues that high energy costs and carbon taxes-particularly those imposed under the UK Emissions Trading Scheme (ETS)-are “squeezing the life out of” British industry and making it uncompetitive globally. INEOS faces a £15 million bill for carbon emissions at Grangemouth for 2024 alone, a cost Ratcliffe says is forcing the company to pause critical investments in green projects and efficiency upgrades. He warns that such policies risk accelerating deindustrialization, citing energy bills that are 400% higher than those in the US and double the European average. “This is not just INEOS; this is a reality for British manufacturers across the nation: carbon taxes and soaring energy costs are suffocating the industry,” Ratcliffe said. He has called for a fundamental rethink of the UK’s approach, urging, “Give us competitive energy costs, give us the incentives to invest in new assets and to play our part in building a strong sustainable industrial future,” emphasizing the need for entrepreneurial freedom and lower taxes to allow the energy sector to function and invest in decarbonization.

Strategically, the closure of Grangemouth means Scotland will now import all of its motor fuels, relying entirely on international supply chains to meet domestic demand. This shift increases exposure to global market fluctuations and supply risks, reducing the country’s energy self-sufficiency. While Petroineos has emphasized that the new import terminal will safeguard fuel supply for Scotland, the loss of domestic refining capacity leaves the nation more vulnerable to external shocks and diminishes its leverage in shaping fuel standards and supply terms. In effect, Scotland’s energy security and industrial autonomy have been significantly lowered, underscoring the far-reaching consequences of the Grangemouth closure for both the local community and the wider Scottish economy.

#petroineos #grangemouth #refinery #refining #ineos #cnpc #petrochina #plantclosure #carbontax #energytransition #netzero #ratcliffe

The two Unipol PE plants have been added with their production, to complete the mass balance.


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