PURPOSE: To suppress formation of carbonaceous material, reduce the loss of hydrogen-donative solvent and eliminate make-up, by subjecting stock heavy oil to hydrocracking and hydrogenation, separating the obtained light fraction into gas and liquid, fractionating the liquid component and using a specific distillate as a circulation solvent.

CONSTITUTION: A stock heavy oil is cracked in a cracking reactor in the presence of a hydrogen-donative solvent, H2 gas and a catalyst and the obtained cracking fraction is hydrogenated and separated into gas and liquid. The liquid is fractionated by a distillation apparatus. A distillate containing ≥90wt.% fraction having a boiling point of 150W250°C, ≥60% fraction having a boiling point of 190W230°C and ≥30% tetralin is used as a circulation solvent and supplied to the cracking reactor. The replenishment of additional hydrogen- donative solvent is not necessary or decreased to ≤0.7% based on the stock oil.