A spokesperson for China's Ministry of Foreign Affairs stated on April 27 that China consistently opposes illegal unilateral sanctions lacking a basis in international law. The remarks came in response to the United States imposing sanctions on a Chinese private oil refining company, citing alleged connections with Iran. The spokesperson urged the U.S. to cease its erroneous practices of indiscriminate sanctions and "long-arm jurisdiction," emphasizing that China will resolutely safeguard the legitimate rights and interests of its enterprises.
On April 27, shares of Hengli Petrochemical Co.,Ltd. (600346.SH), a leading domestic private refiner, opened limit-down at 21.10 yuan, giving the company a market capitalization of approximately 148.5 billion yuan. The decline followed an announcement by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on April 24, which included Hengli Petrochemical's wholly-owned subsidiary, Hengli Petrochemical (Dalian) Refining Co., Ltd., on its Specially Designated Nationals (SDN) sanctions list.
In a statement issued on the evening of April 26, Hengli Petrochemical clarified that OFAC, citing Executive Order 13902, has authorized the winding down of transactions involving the subsidiary. The authorization permits certain necessary transactions related to the liquidation of business involving the subsidiary or any entity in which it holds a 50% or greater interest, provided these are completed by 12:01 a.m. Eastern Daylight Time on May 24, 2026. Payments into blocked accounts must be placed in interest-bearing accounts within the U.S. No other transactions prohibited under the executive order are authorized beyond these specific liquidation activities.
Hengli Petrochemical refuted the sanctions in its announcement. The company stated that since its establishment, it has always adhered to legal and compliant operations, strictly following all applicable laws and regulations in the regions where it conducts business. It affirmed that it has never engaged in any trade with Iran and that its crude oil suppliers have guaranteed that the origin of supplied crude oil falls outside the scope of U.S. sanctions. The company further disclosed that its current production and operations remain normal, with all facilities running at high capacity and stability. Crude oil processing and the production and sale of chemical products are proceeding orderly. The company maintains sufficient crude oil reserves to cover more than three months of processing needs, and its crude oil procurement has not been affected.
Market analysts note that OFAC sanctions primarily impact companies by restricting U.S. dollar settlements, tightening international trade credit, and constraining shipping insurance support systems, thereby affecting crude oil procurement and product exports. Notably, Hengli Petrochemical stated that it will continue to utilize RMB settlement channels for crude oil purchases, combining strategic reserves with market-based procurement to ensure diversified and secure settlement operations.
The company clarified that the sanctions related to Iran only apply to the specific subsidiary and its affiliated companies, and do not involve other operating entities controlled by the listed company. To date, Hengli Petrochemical has not established subsidiaries or branches in the U.S., does not conduct business there, and holds no assets in the country. Following the incident, the company immediately activated a specialized compliance response mechanism, engaging an international professional legal team specializing in sanctions compliance to systematically assess response strategies and develop a detailed action plan aimed at lifting the restrictions as soon as possible.
Hengli Petrochemical emphasized that the U.S. Treasury's decision to place its subsidiary on the SDN list lacks factual and legal basis and constitutes a unilateral sanction. The company firmly opposes what it describes as unfounded accusations and illegal unilateral sanctions that disregard facts and violate international economic and trade rules. It pledged to take all necessary legal measures to protect its legitimate rights and interests and those of its shareholders.
According to its official website, Hengli Group was founded in 1994 and has developed into an international enterprise with a full industrial chain encompassing refining, petrochemicals, polyester new materials, and textiles. The group reported total revenue of 899 billion yuan in 2025. The sanctioned subsidiary is a key company within Hengli's petrochemical sector. Its 20-million-ton-per-year refining and chemical integration project, located in the Dalian Changxing Island Petrochemical Industrial Base, is one of China's four major private refining projects. The other three are the Zhejiang Petrochemical 40-million-ton project, the Shenghong Petrochemical 16-million-ton project, and the Hengyi Petrochemical 8-million-ton project.
Financial reports indicate that Hengli Petrochemical's main products include refined products, PTA, polyester products, and others. Its major subsidiaries and equity-accounted investees contributing over 10% to net profit include the sanctioned subsidiary and other domestic entities. In 2025, approximately 90% of the company's operating revenue and 97% of its gross profit were derived from the domestic market, indicating a relatively low reliance on overseas markets.
Comments