Petroleum and chemical enterprises: Integrating high-quality development into the construction of Hainan Free Trade Port

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On June 1, the “Overall Plan for the Construction of the Hainan Free Trade Port” was officially released. The plan aims to establish, by 2025, in Hainan Province, a policy and institutional framework for a free trade port that focuses on trade and investment freedom and facilitation ； By 2035, the institutional framework and operational model of free trade ports will be more mature, becoming a new hub for China’s open economy ； The three-step goal is to fully establish, by mid-century, a high-level free trade port with strong international influence. The development of the Hainan Free Trade Port demonstrates China’s unwavering commitment to advancing reform and opening up, and it will become a new milestone in this process. Petroleum and petrochemical enterprises should focus on the ultimate goals of the development of Hainan Free Trade Port, adhere to the objectives at each stage, take deepening reforms to enhance their market competitiveness as a starting point, plan for industrial and business development in line with the transition toward low-carbon and clean energy, promote the internationalization of corporate governance, and strengthen their capabilities in global operations and management. Layout planning: Determining the positioning of construction. First, we must promote energy transition. The development of the Hainan Free Trade Port will surely drive a rapid increase in the demand for energy products in Hainan, as well as in the Pearl River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area, but this growth will be centered around low-carbon and clean energy sources. Firstly, it is necessary to highlight the important characteristics of natural gas as a low-carbon and clean energy source, plan appropriately for the development of the natural gas industry, enhance its comprehensive utilization, and promote the growth of the natural gas industry chain. Secondly, it is necessary to keep up with the trends in new energy development; in Hainan, efforts should be made to promote the development of services that rely less on oil and more on electricity, while actively investing in high-efficiency charging stations, hydrogen refueling, gas refueling, and related industries and supply chains. Once again, as the construction of Hainan Free Trade Port progresses, international transportation methods such as shipping and air transport will have excellent opportunities for rapid development. However, the demand for low-sulfur fuel in ocean shipping and for aviation kerosene in air transport is difficult to meet through alternative sources in the short term. These are also traditional areas of strength for oil and petrochemical companies; therefore, it is necessary to plan properly for the production, logistics, storage, and refueling of low-sulfur fuel and aviation kerosene. Second is to advance scientific and technological research and development. Technology is the primary driving force and an important support for corporate development. In the future, competition among enterprises will mainly revolve around competition in technology research and development as well as innovation capabilities. Therefore, oil and petrochemical enterprises should make full use of the opportunities presented by the construction of Hainan Free Trade Port, such as the free cross-border flow of all factors of production and the focus on developing high-tech industries. In particular, they should take advantage of Hainan’s preferential policies, including its ability to attract talent, freedom of personnel movement, and low tax rates, to advance reforms in corporate innovation management and R&D systems. They should strive to match international standards in scientific research, establishing market-based mechanisms for funding, performance evaluation, salary incentives, talent recruitment and development, and technology transfer that are in line with the laws of technological innovation. Enterprises should set up R&D centers in Hainan, recruit senior management and technical leaders from global scientific research institutions, and increase their R&D efforts targeting industry-specific technical challenges and advanced technologies. On this basis, explore the implementation of reforms for the market-based transfer of scientific and technological achievements, in order to accelerate their transformation into real productive forces. Third, advance the digital integrated application. Digital integrated applications represent the direction of future development, and they will also bring about new changes in socio-economic development as well as in corporate production and operational management. In the development of the Hainan Free Trade Port, efforts have been made first and foremost to expand openness in the data sector, ensure the comprehensive collection of data, and foster the growth of the digital economy. The information industry is being developed with a focus on areas such as the Internet of Things, artificial intelligence, blockchain, and digital trade, in order to promote industrial upgrading and build a smart Hainan. At present, after more than a decade of efforts in information technology development and application, petroleum and petrochemical enterprises have established relatively comprehensive information systems, generating a large amount of data related to production, operation, and management. However, there are still significant shortcomings in the application of data mining; this represents the biggest value gap for current enterprises, as well as assets with high potential value. Therefore, it is necessary to leverage Hainan’s advantages as an international and open region to establish research institutions focused on digital applications in enterprises, develop digital analysis models and application scenarios, transform rich data resources into a source for enterprise value management, fully exploit the value of digital assets, and promote the transformation of enterprises into smart organizations. Fourth, advance corporate governance. Corporate governance is an important foundation and guarantee for the efficient operation of a company. At present, China is advancing the modernization of governance, and oil and petrochemical enterprises must also pursue the modernization of their corporate governance in order to adapt to trends such as international operations of companies in an economically globalized environment, market-based allocation of resources, and global flows of capital. Petroleum and petrochemical enterprises should, in line with their strategic development goals and from a perspective of international operations, take advantage of the facilities offered by free trade ports. By relying on Hainan, they can establish overseas business operation headquarters and financial management centers. They should manage investment projects and overseas subsidiaries in accordance with international standards, gain experience in international operations, drive steady internal reforms in their domestic businesses and institutions, establish corporate governance systems that are in line with international practices, and thereby ensure the efficient operation of the companies. Strategic integration: Seizing development opportunities. In the process of building Hainan Free Trade Port, it has been clearly decided to adhere to the new development concepts and high-quality development, align with international standards for economic and trade practices, focus on the liberalization and facilitation of trade and investment, and establish a policy and institutional framework suitable for a high-standard free trade port. The goal is to turn Hainan Free Trade Port into a prominent symbol of China’s opening up in the new era, as well as an important gateway for international trade. This also means that the development of Hainan Free Trade Port is not merely a mere accumulation of various support policies; rather, it involves reforms and institutional innovations with deeper significance and greater impact. This requires oil and petrochemical enterprises, as they seize opportunities, to always adhere to the principle of deepening reform, focus on integrating with the construction and development strategies of Hainan Free Trade Port, and lay a solid foundation from the outset. First, it is necessary to integrate development concepts. The development of Hainan Free Trade Port will reflect the basic requirements of socialism with Chinese characteristics in the new era, giving priority to green development and high-quality development. It will achieve new breakthroughs in areas such as promoting institutional innovation, fostering drivers of growth, and establishing a new pattern of comprehensive openness. A system featuring simplified access procedures and regulatory oversight in accordance with the law will be fully implemented, along with regulatory standards and norms aligned with international practices, as well as sound measures for risk prevention and control. In seizing these opportunities, oil and petrochemical enterprises must thoroughly understand and grasp the guiding principles, basic requirements, and objectives for the development of Hainan Free Trade Port. They should make significant efforts to improve corporate governance and establish enterprise management systems, operational mechanisms, and incentive and restraint frameworks that are in line with international standards, using innovation in both management practices and institutional structures as a continuous driving force for development and enhanced international competitiveness. Secondly, it is necessary to achieve integration in industrial layout. The petroleum and petrochemical industries belong to the heavy industry sector, characterized by high energy consumption and high emissions. As attention to climate change and environmental protection grows at all levels of society, renowned international oil companies, particularly those based in Europe such as BP, Shell, Total, Eni, and Repsol, have established paths for corporate transformation, setting net-zero carbon emissions as the goal of this transformation. The development plan for the Hainan Free Trade Port also outlines strategic goals such as building a pilot zone for comprehensively deepening reform and opening up, an ecological civilization pilot zone, an international tourism and consumption hub, and a key area for ensuring major strategic initiatives. The plan focuses on developing the tourism industry, modern services, and high-tech industries. Petroleum and petrochemical enterprises should take part in the development of Hainan Free Trade Port as an opportunity to adapt to the demands of the new era. They should focus on promoting the company’s transition toward clean and sustainable development by shaping their industrial strategies accordingly, accumulating experience in this process of transformation, enhancing their competitiveness in the clean energy sector, and thus building the foundation for the company’s developmental transformation. Third, it is necessary to achieve integration through institutional innovation. A free trade port is the **most special zone**, and it represents an important exploration of using reform and innovation to drive institutional innovation and promote development. **Hainan will be granted greater autonomy in reform, with support to advance reforms and innovations in an all-round and thorough manner, eliminate institutional barriers that hinder the flow of production factors, and further promote openness through the free flow of goods and factors. Therefore, it is necessary to consider the significance of institutional innovation within the context of China’s efforts to establish a more sophisticated system for the market-based allocation of factors. By focusing on the free cross-border flow of all production factors and global market allocation in the Hainan Free Trade Port, it is possible to drive comprehensive innovation in corporate management systems, institutional frameworks, and business operation models. The establishment of entities in the Hainan Free Trade Port can serve as a catalyst to promote changes in the company’s overall production and management approaches, thereby allowing the company to reap the maximum benefits from reforms aimed at achieving market-based factor allocation.