National oil giant PetroChina plans to close its largest Chinese refinery in 2025 after considering for years moving processing to a smaller site, unnamed sources told Reuters on Monday.

PetroChina has been considering for years to close its Dalian petrochemical plant, located in downtown Dalian in northern China. The refinery, with a capacity of 410,000 barrels per day, represents around 3% of the total production of Chinese refineries.

Dalian municipal authorities have been pushing for years to have the refinery moved away from Dalian city.

The relocation and closure of the Dalian petrochemical plant is part of the plan after several deadly incidents over the past decade at the refinery, located in a densely populated area of ​​the city of Dalian.

As part of the closure and relocation plan, PetroChina has already shut down about half of the refinery’s crude processing capacity, or 210,000 b/d, according to Reuters sources.

CNPC, the parent company of PetroChina, reached an agreement with Dalian authorities two years ago to build a smaller crude oil refinery, with a capacity of 200,000 b/d, at a new refining site and petrochemical industry on Changxing Island.

But PetroChina has not yet made a final investment decision on the proposed new site, the sources told Reuters.

The announced closure of the 410,000 b/d refinery comes at a time when Chinese refiners are facing overcapacity amid tepid demand for road fuel, which appears to be slowly being replaced by electric vehicles and LNG-powered trucks.

China has seen weaker-than-expected demand for road fuel this year, leading to lower refining margins, leaving many factories in debt.

Chinese demand for diesel has likely peaked as the use of LNG as a fuel in heavy-duty vehicles has increased in recent months, analysts say.

The housing sector crisis and the increase in the use of LNG in road transport have weighed on Chinese demand for diesel, dampening the growth prospects for oil demand from the world’s largest crude importer.