Shandong'S Refining And Chemical Industry Was Hit By The North-South Attack To Build A 40 Million Ton Refining And Chemical Base.

Shandong refinery is facing two big rivals' north and South attack. Dozens of local refineries in Shandong are like a group of small sampan scattered along the two big wheels before the 40 million tonnes of zhe petrochemical and 20 million tons of Hengli Petrochemical will be put into operation.


Facing the north and South attack of the two rivals, Shandong plans 40 million tons of large-scale refining and chemical projects.


In China's petro chemical sector, Shandong once owned more than 70% of the country's refining plants, with a total capacity of 2.1 billion tons, making it the world's third largest refining center. In the past every oil shortage, the national private gas stations will flock to the Shandong refinery gate long queues to rush to buy.


But now, we see that the Zhejiang Petrochemical Company located in Zhoushan, Zhejiang and Hengli Petrochemical Company in Dalian, Liaoning will soon be put into operation. The small, numerous and backward technology Shandong refinery is facing the north and South attack of the two rivals.


In February 2019, the Shandong provincial government's work report put forward "accelerating the integration of refining and chemical industry, and promoting the early work of Yantai Yulong Island refining and chemical integration project".


This is a large-scale refinery base project with a total capacity of up to 40 million tons, which carries the burden of integration, spanformation and upgrading of Shandong's refining and chemical industry. Shandong, which has already lagged behind, is trying to rebuild the past glory of the refining and chemical industry.


The project was stopped. Two integration problems!


"Yulong Island refining and chemical integration project is carrying out preliminary work, planning capacity of 40 million tons, which is divided into two phases." Officials of the office of spanformation and upgrading of chemical industry in Shandong province introduced that the project should first carry out industrial integration, and then go to the refinery and petrochemical projects.


In February 19, 2019, in the "two sessions" of Shandong Province, Shandong provincial governor Gong was in the government's work report, "accelerate the integration of refining and chemical industry, and strive to promote the early work of the Yantai Yulong Island refining and chemical integration project". For a while, it attracted widespread attention both inside and outside the industry.


Yantai Yulong island is located in Bohai Longkou Bay, Longkou City, Yantai, Shandong. In May 2010, the Longkou artificial island group was officially approved by the State Oceanic Administration. The Longkou government decided to reclaim land and build, construct, and inviting the artificial islands into Nanshan Group. In January 2011, the construction of artificial islands began to complete in September 2014 and was renamed "Yulong island".


At that time, the national development and Reform Commission was planning to build a large scale petrochemical industrial base in the whole country. At the same time, Jiangsu, Liaoning, Zhejiang and Fujian participated in the competition. In 2015, Nanshan Group began to cooperate with Singapore Jurong international company to invest 30 billion US dollars to build a 40 million ton / year large-scale refinery project on Yulong island. In May 2016, the EIA public announcement of the project was announced for a week, which was opposed by local residents and the project was stopped by the government. As a result, Shandong's refining and chemical industry missed the first round of national planning and construction of large petrochemical base, so that it was against other provinces.


Two years later, Yantai's Yulong island has once again become a hot spot for petrochemical investment, but the project has been "different from others". A month ago, Chen Fei, the acting mayor of Yantai, said in the 2019 Yantai municipal government's work report, "actively participate in the reorganization and reorganization of Shandong, strive for the construction of the new material project of Wanhua Yulong refinery and start construction as soon as possible, and create new advantages for major projects."


Nanshan Group, a senior executive, told reporters that before the Yulong project was mainly Nanshan Group and Singapore Jurong international company as the main body of investment. Nanshan Group has visited the Jurong international in Singapore, because the Singapore Jurong Island invested by the company is a world-famous oil refining center with mature operation experience. Today, the HUAYU Dragon Island project has been led by the Shandong provincial government, and Nanshan Group is only one of the participants. He disclosed that new projects will have new changes in capacity, products and investment entities. There are also variables to continue to participate in Jurong international.


Wanhua chemical (42.080, 1.21, 2.96%) group Limited by Share Ltd (hereinafter referred to as "Wanhua Group") is a global operation of new chemical materials company, covering MDI, TDI, polyether polyols and other polyurethane industrial clusters. But this chemical giant has been concentrating on the high-end chemical industry in the downstream of the industrial chain, and has not been involved in the upstream refining and chemical industry.


A person from Wanhua Group has confirmed that Shandong hopes that Wanhua Group will take the lead in the integration of refining and Yulong Island refining and chemical integration project. However, research and discussion is being carried out inside the enterprise. Shandong province chemical industry spanformation and upgrading office, the official said, "at present there is no definite project legal person".


It has been a long cherished wish of Shandong for many years to consolidate, expand and strengthen. Although Shandong's refining capacity accounted for 70% of the country, the total refining and chemical industry was over 3 billion, and the total oil refining capacity reached 2.1 billion tons, which has grown into the third largest oil refining center in the world. However, Shandong refining and chemical industry showed a large number (more than more than 40) and small scale (one processing capacity accounted for 60% tons in the next refinery at 3 million tons / year, and the processing capacity in 5 million tons per year or above accounted for only 20%), and distributed in Dongying (Zibo, Binzhou, Weifang).


After China's liberalization of the right to import and use of crude oil for private enterprises, Dalian's Changxing Island, Hebei Caofeidian, Jiangsu Lianyungang (3.660, 0.05, 1.39%), Zhejiang Ningbo, Shanghai Caohejing, Guangdong Huizhou and Huizhou Hebei petrochemical industrial base emerged. Compared with tens of millions of tons of large-scale bases, Shandong's land refining is dwarfed by scale, product and technology.


In fact, in 2016, Shandong's land refining industry had foreseen its insufficient competitiveness and began the first round of spontaneous integration attempt, which is a market-oriented exploration promoted by large scale refining enterprises.


In 2016, Shandong petroleum and Chemical Industry Co., Ltd. registered "Zhong An petroleum", to take the large-scale refining Jingbo petrochemical as the leading factor and take the lead in integrating about 6000 private gas stations in Shandong. In July of next year, Li Xiangping, chairman of Dongming Petrochemical Company, the largest refinery in Shandong, proposed the idea of establishing "Shandong refining and chemical group". It was initiated by the enterprises that had obtained the right to use imported crude oil in Shandong Province, and formed a group in accordance with the mixed ownership system to promote synergy in raw material procurement, oil spanportation, distribution channels, and retail terminal management.


However, Shandong's main body of refining is too large, its size is close, its shares are different, and the profits from oil rights are huge.


This may be the last chance for Shandong refining and chemical industry.


In the past, Shandong's land refining industry, with its flexible mechanism, new equipment technology and keen market awareness, could still grow savagely in the cracks of the "three barrels of oil". Nowadays, the construction of a large scale petrochemical base of private enterprises has made Shandong's underground smelting really feel the oppression and impact from its rivals.


A refinery executive analyzed that refining and chemical industry is a typical scale economy. The new large-scale private petrochemical base has large scale, low cost, new technology and long industrial chain. Compared with Shandong's refining industry, there is no advantage. In the North-South attack, the gasoline and diesel produced in Shandong will be difficult to maintain the past national sales market. It is bound to face overcapacity. If the industry can not be integrated in time, it will be very difficult for the future to build a foothold.


As a result, Shandong began to plan for the second round of government led industrial integration - to promote the reorganization and spanformation of the old and new industries in the refining and chemical industry with the help of the Yulong Island refining and chemical integration project, and to reshape the regional competitive advantage. As Zhang Shuping, Secretary of the Yantai municipal Party committee, said, "the integration project of Yulong Island means the spanformation and upgrading of Shandong chemical industry".


In fact, the Shandong provincial government has begun to pave the way for policy spanformation, upgrading and integration in the second half of 2018.


In October 29, 2018, the Shandong provincial government issued the implementation plan for accelerating the development of seven high energy consuming industries with high quality. Among them, the goal of spanformation and upgrading of the field refining industry is clearly defined, and strive to integrate and spanfer the refining and refining capacity of 3 million tons and below by 2022. By 2025, the 5 million tons and below refining capacity will be spanferred in batches. We will cultivate a world-class industrial base of fine chemicals, green chemical and chemical materials, which is an internationally competitive large enterprise group and refinery and chemical integration.


A Nanshan Group administrator said that in December 2018, Liu Jiayi, Secretary of the Shandong provincial Party committee, visited Yantai on Yulong island for a visit. Later, the Yulong Island project was included in the work report of Yantai and Shandong government as a key investment project.


In accordance with the procedure of "integration first and then on the horse project", the smaller scale production and consolidation is the first to bear the brunt. But a senior executive in Zibo, who does not want to be named, points out that there are numerous and different situations in Shandong, some are local state-owned enterprises, some are tax paying large households, and some have many employment personnel. They will integrate the production capacity and crude oil quotas to Yantai Yulong Island, which is bound to involve many problems, such as assets, taxes, personnel resettlement and so on, and the balance of interests among regions.


In fact, in the view of the industry, the quota of crude oil obtained by every land refining enterprise is quite variable. If we do not consider the annual increase of refineries and individual differences, the quota and the approval standard of the imported quotas will determine the reduction of the crude oil quota year by year, because the below standard is the import performance of the previous year. Once the market changes and imports fall, it will affect the quota of second years.


Jin Lian created analyst Zhou Guoxia pointed out that refining and chemical industry integration is the trend of the times, has become the industry consensus, but Wanhua Group has not been involved in the upstream refining sector.


At the same time, Bohai is a semi enclosed inland sea. In the newly published "serious pollution area" of the communiqu on marine ecological environment in 2017, Bohai's "Liaodong Bay, Bohai Bay and Laizhou bay" are all listed. Whether or not Bohai carries 40 million tons of large petrochemical base projects must be considered at the national level.


Due to the fact that it is still in the early stage of the project, there are still many uncertainties in the work of Yulong Island refinery integration project, including project planning, environmental assessment and so on. As an official of Shandong chemical industry spanformation and upgrading office said, this project is making progress every day and changing every day.


However, it can be determined that the integration of Shandong refining and chemical industry has become a consensus between the government and enterprises. As one industry insider has said, this may be the last chance for Shandong refining and chemical industry to catch up.