China is building mega refineries with capacity to process more crude oil than the UK’s combined, just as fuel demand stalls

China is investing tens of billions of dollars in new mega-refineries even as its fuel demand is expected to peak within five years, raising the risk it will flood the region with cheap exports.

At least four projects with about 1.4 million barrels a day of crude-processing capacity, more than all the refineries in the UK combined, are under construction. That’s after the country already added 1 million barrels since the start of 2019. All that capacity will add more petroleum products and plastics just as China National Petroleum sees fuel demand peaking in 2025 as electric vehicles sap consumption.

The mismatched building boom underscores how rapidly clean energy and electric vehicles are changing the industrial landscape in China, especially after Xi Jinping’s pledge last month to go carbon neutral by 2060. It also positions the country to be an even bigger exporter of fuel, endangering refinery operations from South Korea to Australia to Europe.

“China is increasingly in a position to take market share globally as it continues to expand refining capacity while its own demand growth is slowing,” said Michal Meidan, director of China at the Oxford Institute for Energy Studies.

Chinese refining capacity has nearly tripled since the turn of the millennium as the country’s oil giants tried to keep pace with the rapid growth of diesel and petrol consumption.

There’s now more fuel production than the country needs, leading to exports of nearly 1 million barrels a day, close to the volumes shipped by South Korea and India, according to IHS Markit.