Shandong Shouguang Luqing

Shandong Shouguang Luqing Petrochemical Co., Ltd. is an independent Chinese oil refinery based in Shouguang, Shandong Province, one of hundreds of privately owned facilities collectively known as teapot refineries. Shandong province hosts the highest concentration of teapots in China; collectively they account for a substantial share of national independent refining capacity and have been the primary end market for discounted Iranian crude diverted from Western buyers since the 2022 sanctions wave. On 2 May 2026, MOFCOM named Shandong Shouguang Luqing in China's first-ever activation of the 2021 Blocking Rules, formally prohibiting it from complying with OFAC's Iran sanctions designations. The order followed OFAC's 24 April designation of Hengli Petrochemical (Dalian) and extended legal counter-measure protection to four further Shandong teapots simultaneously.

As one of five firms named in the same MOFCOM order, Shandong Shouguang Luqing is now caught between two incompatible legal duties: Chinese law prohibits it from observing OFAC's designation, while US secondary sanctions risk penalises continued Iranian crude purchases. Any multinational bank, insurer, or logistics firm servicing the refinery faces the same jurisdictional vice.

Beyond the immediate sanctions conflict, Shandong Shouguang Luqing is a representative example of the teapot sector's structural role in China's energy system: it buys on the spot market, processes cheaper feedstocks that state refiners avoid, and buffers China's refining system against price shocks. The Blocking Rules designation makes it a test case for how Beijing enforces its counter-sanctions architecture at the company level.