The non-public offer is the largest single green corporate bond issued by a privately owned firm in China and will pay a 6% annual interest rate, the company said in a statement to the Shenzhen Stock Exchange.
Chinese coal, oil and gas producers are allowed to use green financing to pay for clean technology and efficiency upgrades, but regulators have been under pressure to bring China's rules closer in line with international standards that ban such kinds of funding.
Green financing allows firms to gain access to funds from a growing number of investors now unwilling to support unsustainable and polluting industries.
However, the proceeds of Shenghong's bond will be used to fund an oil refinery capable of processing 16 million tonnes per year of crude used as a feedstock for a petrochemical plant due to start operations in 2021, the official People's Daily said, citing a company official on Wednesday.
The plant's green credentials derive from its energy efficiency, which will exceed national standards, the paper said.
China's private refiners have spent heavily to build new giant petrochemical complexes amid a push by Beijing to boost high-value added chemical production.
Another independent oil refiner, Rongsheng Petrochemical, tried to issue a green bond of up to 4 billion yuan that had secured approval from the securities regulator but scrapped that plan in June citing market volatility.
China issued $21.8 billion in green bonds in the first half of 2019, up 62% on the year, but less than half was aligned with international standards, according to the Climate Bonds Initiative, which promotes green bond standards.
According to a review of financial data, Chinese financial institutions provided at least $1 billion in green financing to coal-related projects in the first six months.
The Shanxi Luan Group, one of China's biggest coal firms, was allowed to issue a 3 billion yuan green bond in June, with the proceeds earmarked for a project aimed at generating power from high-sulphur coal.
Liu Junyan, a Beijing-based senior climate and energy campaigner with Greenpeace East Asia, said the proportion of green finance going to non-green projects has "skyrocketed" this year.
"The green finance market is growing, but it's disturbing to see such impressive amounts of money get misdirected to fossil fuel projects," she said.
(Reporting by David Stanway and Muyu Xu; Editing by Sherry Jacob-Phillips and Christian Schmollinger)
By David Stanway and Muyu Xu