Shandong, China / London – China’s $20 billion refinery Yulong Petrochemical has been forced to pivot sharply toward Russian crude after sanctions imposed by the UK on October 15 and the EU a week later over its Russian oil dealings disrupted its global supply chains.

The sanctions triggered an immediate exodus of Yulong’s non-Russian suppliers, foreign customers, banks, and service providers. Major energy firms including BP, TotalEnergies, Saudi Aramco, PetroChina, and Trafigura canceled shipments, while trading platforms and financial services in Singapore—where Yulong maintains its global trading office—restricted access.

With conventional suppliers and financing channels constrained, Yulong has doubled its Russian oil purchases for November and added over 10 cargoes for December delivery. Previously, Russian crude accounted for 40–50% of its intake; it now represents the majority of imports, primarily the ESPO blend, Russia’s flagship grade for Asian markets.

Analysts note that the sanctions may have unintended consequences, forcing Yulong and other blacklisted refiners to process more Russian crude rather than less. “These sanctions are proving … counterproductive because instead of stopping Russian crude processing, they leave sanctioned refiners no option but to process more,” said Rajesh Chopra, energy analyst at XAnalysts.

Domestic operations have shifted to absorb the disruption: Yulong is diverting petrochemical output to China’s domestic market, limiting refinery run declines. A downstream unit planned for next year could further expand internal consumption. Industry sources suggest Yulong may also segregate certain operations into a separate entity, a strategy used by other U.S.-sanctioned Chinese refiners to allow continued dealings with non-sanctioned counterparties.

Financing has also adapted, with government-backed traders like Xiamen Xiangyu Group expected to continue providing intermediary credit, enabling Yulong to purchase Russian cargoes on favorable terms. The refinery’s November Russian oil purchases are valued at roughly ¥4.7 billion ($660 million).

Founded by private Nanshan Group and co-owned by state-controlled Shandong Energy Group, Yulong had aimed to become a globally significant refiner while modernizing Shandong’s crowded refining sector. Export restrictions have now accelerated a focus on domestic markets and Russian supply chains, with limited options to engage Western partners.

Market participants say Yulong’s reliance on discounted Russian crude could improve margins despite the sanctions, with one Chinese executive noting, “With cheaper, abundant Russian oil, Yulong could fly high and fly free.”