EU targets China’s petrochemical producers in expanded Russia energy sanctions
The European Union has imposed a new round of sanctions on Russia’s energy network, naming China’s Shandong Yulong Petrochemical and Liaoyang Petrochemical among the restricted entities in its 19th sanctions package.
The European Union has imposed a new round of sanctions on Russia’s energy network, naming China’s Shandong Yulong Petrochemical and Liaoyang Petrochemical among the restricted entities in its 19th sanctions package. The move marks a significant escalation in Brussels’ efforts to choke off Moscow’s wartime revenues and the first time the bloc has directly targeted major Asian refiners accused of facilitating Russian crude flows.
According to the European Commission, Shandong Yulong Petrochemical, Liaoyang Petrochemical, and Chinaoil (Hong Kong) were sanctioned for being “significant buyers of Russian-origin crude oil that materially contribute to the Kremlin’s export earnings.” The measures also introduce a phased ban on Russian LNG imports, restrictions on more than 100 additional vessels tied to Russia’s so-called “shadow fleet,” and fresh prohibitions on six Russian banks.
Located in Yantai, Shandong province, Yulong operates one of China’s newest and largest integrated refining and petrochemical complexes, with a crude processing capacity of around 400,000 barrels per day. The site houses downstream units capable of producing approximately 1.9 million tons per year of PP, 1 million tons of HDPE/LLDPE, and 0.7 million tons of HDPE. Commissioned in stages from late 2024, the complex has quickly emerged as a key domestic and export supplier in China’s base plastics sector.
Market participants told CommoPlast that following the UK’s earlier sanctions and the EU’s latest inclusion, several international crude suppliers have cancelled cargoes to Yulong amid rising compliance concerns. “Buyers are taking a wait-and-see approach,” one trader said, noting that insurers and shippers are reassessing exposure to the refiner. Sources added that Yulong may need to adjust its feedstock strategy or trimming operating rates if alternative supplies remain limited.
Beijing’s Ministry of Commerce denounced the EU’s decision, describing it as “economic coercion” that risks destabilising global energy markets. The ministry said China would “take all necessary measures” to safeguard its companies. Analysts view the move as a calculated broadening of Western sanctions enforcement, extending beyond Russian state entities to include foreign intermediaries that underpin Moscow’s trade flows.
The inclusion of Shandong Yulong adds a new layer of uncertainty to global crude procurement and downstream petrochemical supply. Any prolonged disruption to the refiner’s operations could tighten regional PP and PE availability, influencing near-term pricing trends in China and across Asia. Market watchers note that the overall impact will depend on how swiftly Yulong secures alternative feedstock sources and stabilises operations under the evolving sanctions regime.
Written: Aiman Haikal