Private Refineries Reshape Industrial Pattern

Private refining forces continue to rise and a new order is being built; Shandong Dilian, once regarded as the representative of China's private petrochemical industry, has been away from the stage Center for some time.

In the newly released second batch of refined oil export quota documents in 2021, Zhejiang Petrochemical Co., Ltd. is on the list, and Shandong refining and Chemical Co., Ltd. is still out of business.

At present, large-scale and intensive refining and chemical integration projects such as Zhejiang Petrochemical and Hengli Petrochemical are reconstructing the market competition map; However, many small and medium-sized refineries in Shandong are facing the embarrassing fate of integration and replacement due to their small refining volume.

Shandong Yulong Island refining and chemical integration project under construction has become a leader in the replacement of old and new energy and industrial structure adjustment in Shandong Province. However, facing the capacity of over 100 million tons and more than 50 independent refineries, the integration of Shandong refining is very difficult.

Shandong refining Co., Ltd. has no chance to export refined oil

According to Zhuo Chuang information and other institutions, recently, the second batch of refined oil export quota documents in 2021 have been issued, with a total of 7.5 million tons; Besides the traditional state-owned petrochemical giants PetroChina, Sinopec, CNOOC, Sinochem and CNOOC, Zhejiang Petrochemical and China ordnance industry group are among the approved enterprises.

The domestic refining and chemical industry has been oversupply for many years. For refining and chemical enterprises, having export quota of refined oil means that there is certain operation space to fully release production capacity and relieve the operating pressure brought by excess supply.

In 2016, a number of private enterprises, including Shandong refining and refining Co., Ltd., were granted oil product export quota. However, due to the low completion rate of export quota in that year, the export right of Di refining was recovered in 2017, and since then, it has been out of the export market.

Until the end of 2020, the private refining and chemical industry once again gained the export qualification of refined oil, but the export subject became the emerging private refining giant Zhejiang Petrochemical, and Shandong refining continued to be a spectator.

On the whole, the export quota of the second batch of refined oil products has been greatly reduced, with a decrease rate of 75% on a month on month basis and a decrease rate of 73% on a year-on-year basis.

Industry insiders pointed out that this was the result of the superposition of a number of policy factors during the year.

Local refining is a proper term for the domestic oil refining industry, which originally means local independent refineries, compared with the main refineries subordinate to state-owned oil companies. As Shandong refining occupies the vast majority of domestic refining capacity, the former has become the representative and wind vane of domestic refining industry.

Some local refineries are often called "teapot" refineries because of their small scale, low primary processing capacity and lack of follow-up complex product process flow; Due to the problems in safety, environmental protection, tax and oil quality, it is often regarded as the focus of industry renovation.

In recent years, 20 million tons / year private refining and chemical integration projects have been put into operation, and the market competitiveness of traditional refining has been unmatched.

Local refineries reduce 30% of refining capacity

In recent years, the large-scale refining and chemical integration projects are located in coastal areas, with complete industrial chain, transportation and logistics costs far lower than those of inland traditional refineries, wider market coverage and greater advantages in public engineering costs.

It can be said that the emerging large-scale refining and chemical integration projects, as well as the entry of foreign capital, are reconstructing the competition pattern of refining and chemical market. Under the background of new and old kinetic energy conversion and double carbon target, for the refining industry, the elimination of backward capacity and the integration of superior capacity are the only way.

In Shandong Province, where the refining industry is concentrated, the grand goal of industrial adjustment has been put forward, but there are still many difficulties in its implementation.

In 2017, a private petrochemical giant in Shandong Province tried to integrate Shandong refining enterprises, but failed to make substantial progress due to the lack of its own size, industry advantages, and different interests of various parties.

In 2018, the Yulong Island refining and chemical integration project in Longkou, Yantai, started the government led integration mode of refining and chemical industry, that is, gradually shut down the small-scale refining and chemical production capacity through the new large-scale refining and chemical integration project, so as to realize the capacity integration.

In 2018, Shandong Province issued the "notice on the implementation plan for accelerating the high-quality development of seven high energy consuming industries", which put forward the goal of transformation and upgrading of the local refining industry: strive to integrate and transfer the refining capacity of local refining enterprises located in urban densely populated areas and with refining capacity of 3 million tons or less by 2022; By 2025, the refining capacity of local refining enterprises with 5 million tons or less will be integrated and transferred step by step.

By 2025, the crude oil processing capacity of the local refining industry in Shandong Province will be reduced from about 130 million tons / year in 2018 to about 90 million tons / year; Regional concentration of refining industry has been further improved, refining and chemical integration and scale intensification have been significantly improved, and the transformation from "one oil dominating" to "simultaneous development of oil and chemical industry" has been realized.

According to Longzhong's calculation, the actual target is about 106 million tons after adding Zhenghe, Huaxing and Changyi, since the 90 million tons / year target in the 2018 policy does not include the independent refineries under Sinochem.

Industrial integration has a long way to go

The whole body is moved by one hair. Although the scale of the local refining enterprises can not be compared with the large-scale refining and chemical projects of 10 million tons, they are often the local tax payers and job seekers, and the capacity transfer involves many problems such as assets, taxes, personnel placement, etc.

In addition, for small refineries, although the market competition is becoming more and more fierce, the subjective will of enterprise integration is not strong.

According to the previous planning requirements, it can be seen that 5 million tons / year may be a threshold to measure independent refineries in the future; At present, there are 15 independent refineries with refining capacity of 5 million tons / year in Shandong Province, and the corresponding refining capacity is about 94 million tons / year. If it can be carried out as planned, there will be no problem to achieve the set target.

"But the problem is that there are still a lot of independent refineries under 5 million tons / year in Shandong Province, and only Yulong Island refining and Chemical Co., Ltd. has reached a clear integration intention." Li said.

According to the statistics of Longzhong information, by the end of 2020, there are 16 independent refineries under 2 million tons / year in Shandong Province, with corresponding refining capacity of 8.75 million tons / year. As it has been clearly defined as backward refining capacity, this part of refining capacity is likely to be reduced.

In the range of 2-5 million tons / year, there are 24 independent refineries in Shandong Province, with the corresponding refining capacity of about 75 million tons / year. Whether the target of capacity reduction can be achieved depends on this.

Li Yan pointed out that at present, the willingness of refineries in this region to carry out joint restructuring is not strong, and if the threshold line of 3 million tons / year and 5 million tons / year is forcibly stuck in the later stage, it is not ruled out that some refineries will expand to meet the targets.