Central state-owned enterprises team up with Shandong Province to secure land: Activity in the Huangshi Triangle’s petrochemical sector is on the rise

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　2010-02-22 08:17 21st Century Business Herald: CNOOC’s plan to build a large petrochemical complex with an annual production capacity of nearly 30 million tons is being realized in the Yellow River Delta region. 　　CNOOC has currently completed the project approval for Phase 1 of the CNOOC Logistics Park in the Dongying Port Economic Development Zone. The first phase of CNOOC Logistics Park includes a crude oil and fuel oil storage facility with a capacity of 1 million cubic meters, a refined oil storage area with a capacity of 140,000 cubic meters, as well as a storage yard covering 130,000 square meters ； In addition, it also includes the construction of 2 × 50,000-ton and 2 × 5,000-ton liquid chemical terminals along with associated supporting facilities at Dongying Port. According to officials from Dongying City, the estimated investment for the first phase of the project is nearly 2.45 billion yuan. 　　A refining capacity of 30 million tons is taking shape. This is just one of the projects outlined in the Cooperation Agreement on the Dongying Port Terminal and Storage Area Project as well as the integrated refining and chemical processing project, signed between CNOOC and Dongying City. Under this agreement, CNOOC has already completed the preliminary feasibility study for a project involving 10 million tons of refining capacity and 1 million tons of ethylene production through integrated refining and chemical processing. Local officials say that Dongying City and CNOOC will work together to advance this integrated project into the ongoing 12th Five-Year Plan. 　　Under the agreement, CNOOC will also plan to develop a CNOOC industrial park, build large-scale refining projects with a capacity of 10 million tons as well as ethylene production facilities with a capacity of 1 million tons. It will also construct a 250,000-ton class \"island-style\" oil terminal, aiming to create an integrated refining and chemical processing base, a fine chemicals manufacturing base, as well as a specialized service center for the Bohai Sea oil fields and a marine engineering base. 　　CNOOC’s total investment in projects at the Dongying port area amounts to 45 billion yuan. 　　And this is just part of CNOOC’s grand plan for a large-scale petrochemical complex in the Yellow Triangle region. 　　After acquiring gratuitously 51% of the controlling stake in Shandong Huahe Group from Weifang State-owned Assets Supervision and Administration Commission last September, CNOOC pledged to invest 10 billion yuan over the next two years to expand Shandong Huahe Group’s refining capacity to 8 million tons. In the field of salt chemicals, it plans to build projects such as one producing 450,000 tons of chlor-alkali products and another producing 250,000 tons of integrated PVC. 　　CNOOC’s ambitions in Weifang go beyond that as well. CNOOC will build a 10-million-ton oil refining plant and a 1-million-ton ethylene plant in Weifang City, along with related salt chemical industry projects; the total investment for these projects amounts to 40 billion yuan. 　　Our newspaper has learned from the Management Committee of Binhai District in Weifang that both of CNOOC’s aforementioned projects are located in Binhai District, Weifang. The 2,000 mu of land required for the construction of these new refineries with a capacity of 10 million tons each and ethylene plants with a capacity of 1 million tons each has already been reserved, and the necessary infrastructure such as water, electricity, roads, etc. has been established on that site. 　　The Huangdao to Weifang heavy liquid transportation pipeline project, which is intended to ensure a stable supply of raw materials, began construction at the end of 2009. This pipeline, with an annual capacity to transport 15 million tons of crude oil, is set to be completed in November this year. A staff member from Weifang’s Development and Reform Department explained that this pipeline can support Weifang’s oil refining capacity of 20 million tons, enabling cost savings of over 60% per ton of crude oil. 　　State-owned enterprises expanding their operations It is understood that Dongying and Binhai District in Weifang are also two of the four port-related industrial zones within the large-scale development of the Yellow Triangle region; both of these areas have designated the petrochemical and fine chemical industries as their key sectors. 　　In fact, CNOOC was able to advance its vision for a large-scale chemical industry in the Yellow Triangle thanks to the strong partnership it had established previously with Shandong Province. 　　The 20 million tons of oil produced by CNOOC’s Bohai Bay oil field lack a downstream refining market; given Shandong Province’s refining capacity of 40 million tons, the quota allocated for this oil accounts for only 10%. Through complementary win-win cooperation, the two parties signed a strategic cooperation framework agreement in January 2008. Under the agreement, CNOOC will invest in Shandong Province to build ports and docks, reorganize local oil refining enterprises, develop petrochemical industries, and construct oil product distribution networks, among other major projects. 　　Shandong Province has even included strengthening cooperation with CNOOC in its development plan for the \"Yellow Triangle\" region. Together with Lihua Yi Group, the leading local refinery in Shandong that has already contributed over 5 million tons of crude oil to CNOOC’s output, CNOOC’s crude oil processing capacity in the Yellow River Delta region of Shandong is nearly 30 million tons. 　　In addition, new 1-million-ton ethylene integration projects have been launched in Dongying and Weifang respectively. Based on estimates of the investment amounts for existing projects, CNOOC’s investment scale in Shandong’s Yellow River Delta region is approaching 100 billion yuan. 　　A local official said that without the strong public relations capabilities of central state-owned enterprises, as well as their foresight and influence in major industrial planning, it is almost impossible for a city-level government to obtain permits for two refineries with a capacity of ten million tons each and one ethylene plant with a capacity of one million tons, especially given that areas around the Bohai Sea already have large refineries and ethylene plants. 　　(Author: Xu Weilai)