Technical exchanges among local petroleum processing enterprises
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Shandong’s local refineries are the best among those operated by private entities in China: most of them started with a capacity of less than 100,000 tons per year, but after more than a decade of development, their capacity has increased to 5 million tons per year. The raw materials used for processing are also extremely diverse, including various types of heavy oils such as M100 and CST180. The refining facilities in the areas I have visited are constantly being expanded in scale, and their technology relies on that developed by petroleum universities; multiple variations are created, such as MIP being transformed into MSR, etc. Let’s discuss whether these local refineries have a better chance of survival in the future compared to CNPC and Sinopec, assuming equal competitive conditions.
Absolutely not; refining is of strategic importance for national defense, and energy sources must be under state control. At a certain point, reorganization will take place. In the case of deep levels, it’s an economic issue – there’s no need to discuss it.
I believe that in the future, there will surely be a fair chance and an opportunity for private crude oil processing companies. The monopolistic practices of companies like CNPC and Sinopec have led to numerous problems: they control crude oil extraction as well as the processing of crude oil. As international prices for refined oil keep rising, they adjust their profits internally, yet they still demand higher prices for refined oil. It’s an industry that reaps enormous profits, one that uses policy pressures as a tool, one that dares to set conditions before the National Development and Reform Commission, and one that even dares to limit production of refined oil as a means of exerting pressure. Otherwise, Chen Tonghai will run into problems; internal management will become chaotic, and the huge profits earned will be spent on personal whims, resulting in massive waste. The system is imperfect; resources are divided between different entities, only to be combined again today. It’s called resource integration, but in reality it’s just a waste of money. The cost of replacing a single sign for CNPC amounts to hundreds of millions of yuan – it’s just the whim of some leader. Replacing all the signs across the country is truly heartbreaking. In the past few years, CNPC and Sinopec competed with each other by frantically acquiring private gas stations, spending a fortune in doing so. They would have evaluation agencies assess the value of such stations; a dilapidated gas station worth 2 million could be valued at 5 million, and they would still accept that figure and make the purchase – it was simply a waste of money. For example, when investing in a project, there are procedures such as feasibility studies, submissions for approval, approvals, and expert evaluations – and all of these require money to settle things. As for internal matters, it’s necessary to use relationships with people at higher levels, and that also costs money. Take the A olefin project as an example: it was launched on a large scale, being the first of its kind in the country, but losses were incurred as soon as operations started, so it was shut down. If private-sector management mechanisms are introduced, they will eventually fail; otherwise, there’s concern that it constitutes a vital economic sector, and allowing private entities to get involved means they’ll only be there to make money – so how do other countries handle this? ? ? Pfft, I was just joking. This is just nonsense said while drunk; everyone, please don’t take it to heart.
The technology, personnel quality, and management systems of local private oil processing enterprises still need to be improved. There is a significant gap compared to CNPC and Sinopec. More importantly, technological updates and upgrades originate from the research institutions of major oil companies such as Sinopec and CNPC, including those involved in the development of catalysts.
The development of local refineries represents a challenge to monopoly practices; without the involvement of these local refineries, it would be impossible to determine what oil prices should be. **Policies that encourage monopoly exist for both local refineries and this entire industry, leaving small refineries to survive in difficult conditions.
CNPC and Sinopec have advantages over local refineries in terms of equipment, technology, raw materials, and **policy support. However, they have not yet broken free from the framework of **monopoly, which results in a lack of market competitiveness, no sense of urgency to improve performance, and failure to take full advantage of economies of scale. Their costs are higher than those of local refineries, which creates opportunities for these latter to develop. If **local refineries were given the same policies as CNPC and Sinopec, those companies would eventually close down, and their subsidiaries would be acquired by local refineries.
Have any of you ever visited a local refinery or worked at one? Please do not make horizontal comparisons between CNPC, Sinopec, and local refineries. When it comes to local refineries, Shandong is the best-developed! Firstly, one of the most important reasons for the survival of local refineries is that the oil prices in the Chinese market are not aligned with international prices. Those familiar with economic analysis know that, considering only economic benefits, all companies that process crude oil and produce fuel are operating at a loss. Local refineries basically do not process crude oil; instead, they use heavy oil and fuel oil from Europe (note: fuel oil). The second issue is pollution – one can tell from a distance that there is a refinery in the area, as the smell there is always very pungent. Large state-owned enterprises need to invest significant human and financial resources in researching environmental protection technologies; it’s simply unimaginable for local enterprises to do so! Thirdly, local refineries have flexible production capabilities; fuel is profitable, so I produce fuel, and asphalt is profitable, so I produce asphalt. If all large state-owned enterprises were to produce a certain product, it’s easy to imagine that Sinopec and CNPC wouldn’t be able to decide on what to produce or in what quantities!
The costs are high, their dominant position is secure, and any losses are covered by **; how can employees of such companies have the motivation to work?
Regarding the serious pollution problems at local refineries on the 7th floor, I don’t know which refineries you have visited or which Sinopec companies you have compared them with. Nowadays, local refineries pay great attention to environmental protection, as it is not easy to survive; they are already not supported and face various restrictions, so their operating conditions are much more difficult than those of Sinopec companies. I have visited several local refineries in Shandong, as well as Qilu Petrochemical and several plants in Fushun. In my opinion, the environmental pollution caused by Sinopec companies is much more severe. Refining companies have similar facilities for treating wastewater and exhaust gases; the difference lies in environmental capacity, with larger companies having a much greater impact on the surrounding environment.
Local refineries are most focused on development, as they are well aware that without **financial subsidies, it is their own money that must be used carefully and sparingly； Failure means falling into an abyss, so they place great emphasis on technology, equipment, and environmental protection; any mistake could lead to their own failure, with the refinery having to close and many employees losing their jobs. What’s more important is to spend money where it’s needed most. With a clear mind and hard work, they strive to make their enterprises stronger and more successful – they are true experts in the market economy! They let the market determine their survival! May they truly develop and bring new vitality to our refining sector!!!!