Sinopec Expands Xinjiang Refining Complex Into High-Value Petrochemicals

Sinopec has started a major upgrade of its Tahe refining and petrochemical complex in Xinjiang, aiming to boost capacity and diversify into higher-margin products such as ethylene and paraxylene, amid a broader shift in China’s industrial strategy, according to a news release on Saturday.

The project will raise Tahe’s crude processing capacity to 8.5 million metric tons per year, up from the current 5 million mt/year, and add 16 new refining and chemical units. The new units will include an 800,000 mt/year ethylene cracker, an 800,000 mt/year aromatics complex, a 2.4 million mt/year hydrocracking unit, and a 1.5 million mt/year continuous reformer, the company said.

Construction is scheduled to be completed by 2029, and once operational, the facility is expected to generate roughly 20.2 billion yuan ($2.8 billion) in annual output value, based on a $60 per barrel crude benchmark. It will also contribute 3.5 billion yuan in annual tax revenue and create around 10,000 jobs, Sinopec added.

Strategic Upgrade in Resource-Rich West
The launch of the project coincides with the 70th anniversary of the Xinjiang Uyghur Autonomous Region, and was marked at a high-level event in Urumqi, where Xinjiang Party Secretary Chen Xiaojiang announced the commencement of multiple regional projects.

“In recent years, Sinopec has deepened cooperation with Xinjiang to align with national strategic goals, and the Tahe project represents a new phase in building an integrated, green, and intelligent petrochemical hub,” said Hou Qijun, Sinopec chairman, according to the release.

The project utilizes Sinopec’s proprietary low-carbon process technologies, and is positioned to serve as a cornerstone for the development of industrial clusters in oil and gas processing, textiles and advanced materials in China’s northwest.

Aligning With China’s Industrial Pivot
The upgrade comes as Beijing accelerates the retirement of aging petrochemical facilities nationwide in favor of more efficient, environmentally compliant plants. According to Sinopec’s 2025 interim financial report, the company spent 27.6 billion yuan in the first half of the year on upstream exploration and capacity development, heavily concentrated in Tahe and Jiyang in Shandong province.

The Tahe project reflects China’s broader strategy of moving up the value chain in chemicals, pivoting from low-margin bulk fuels to higher-value petrochemical intermediates such as ethylene, paraxylene and aromatics. These products are essential feedstocks for synthetic fibers, plastics and advanced manufacturing.

Local Resource Utilization and Connectivity
Located in Kuqa, Xinjiang, the Tahe complex is Sinopec’s only integrated refining and petrochemical site in northwest China. It has historically served markets across Xinjiang, Gansu, Qinghai and Tibet, with dedicated rail and pipeline infrastructure supporting logistics across the vast inland region.

Sinopec said it has supplied over 70 million mt of refined products to western China over the past two decades. With the latest expansion, the company aims to enhance regional resource utilization and industrial integration, particularly in areas linked to domestic textile and consumer goods supply chains.

Petrochemical Expansion in a Tighter Market
The project takes place amid structural shifts in Asia’s aromatics and petrochemicals landscape. Regional producers, particularly in South Korea, are cutting naphtha-based capacity and shutting older crackers in response to margin pressure and overcapacity. Analysts expect these moves to tighten supplies of benzene, xylenes and paraxylene, potentially creating pricing tailwinds for integrated producers like Sinopec.

While demand for petrochemical derivatives remains muted in the short term due to global macroeconomic uncertainty, analysts see longer-term supply constraints driving a market rebalancing by 2026–2027.

“Sinopec is positioning itself for the next upcycle,” said a Shanghai-based broker. “Integrated, modern plants like Tahe will have a cost and logistics advantage as older capacity elsewhere exits the market.”

Looking Ahead
Sinopec said it views the Tahe complex as a model for high-quality development in China’s western regions, pledging to continue investment across refining, petrochemicals, new energy, and rural revitalization under the country’s 15th Five-Year Plan.

“This is not only about energy and chemicals,” Sinopec said in its news release. “It’s about anchoring long-term regional development and contributing to national unity and prosperity.”