Shanghai Petrochemicals harshly criticizes the National Development and Reform Commission, calling for a reorganization of the petrochemical industry
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The chairman of Sinopec harshly criticized the National Development and Reform Commission, revealing that the company achieved a net profit of 2.1 billion last year. March 7, 2010, 00:00, Jinghua Times, Liu Wei. I want to comment (46). Font size: T|T. Report by our newspaper (reporter Liu Wei): Yesterday, during the group discussions within the Shanghai delegation, Rong Guangdao, a deputy to the National People’s Congress and chairman of Sinopec Shanghai Petrochemical Co., Ltd., revealed that even in 2009, the most difficult year, his company still managed to achieve a net profit of 2.1 billion. He believes that the current layout of the petrochemical industry across the country is quite unreasonable; there is an overcapacity, yet new projects continue to be launched in various regions. It believes that the NDRC’s approach to regulating the layout of the petrochemical industry is “too lenient”. During his speech, Yu Zhengsheng of the Shanghai Municipal Party Committee interjected, \"The reason why various places keep launching such projects is that your industry is extremely profitable and can boost local finances.\" ” Revealing that the company’s net profit last year was 2.1 billion, Rong Guangdao said he had a deep understanding of the impact of the financial crisis on the petrochemical industry. “The toughest period for our industry was from the fourth quarter of 2008 through the first quarter of 2009; at its worst, we lost over 30 million per day. I gave a report to Yu ** and said I could go on no longer. Yu ** said that perseverance is necessary; other companies are also suffering heavy losses, with China Eastern Airlines losing over 40 million yuan per day. ”“We held on until the first quarter of 2009; by March, we began to notice signs of economic recovery and started resuming production. ”Rong Guangdao said that even under the severe impact of the financial crisis, Shanghai Petrochemical still achieved good profitability last year, with profits of over 2.1 billion yuan and tax payments of over 3 billion yuan, showing growth compared to 2008. The petrochemical industry has an overly scattered layout; Seong Gwang-doo went on to harshly criticize issues such as the unreasonable structure of this industry. “The industry needs to reflect deeply on the lessons learned from the financial crisis; there are serious problems with its structure as well as with its quality standards. The refining capacity in the petrochemical industry is entirely excess, and the distribution of such facilities is too scattered – there are roughly 100 facilities for every 1 million tons of processing capacity; these facilities can be found in all regions except Guizhou, Qinghai, and Yunnan. Ethylene is available in 16 provinces and cities. This has not been heard of elsewhere; the accepted principle in the petrochemical industry is centralized distribution, mainly along the coasts. There’s also the issue of the product structure: the overall volume is extremely large, with China ranking first in both oil refining and ethylene production, but there are too many small-scale operations. ” At this point, Yu Zhengsheng, a member of the Shanghai Municipal Party Committee, interjected, \"Local governments are willing to develop the petrochemical industry in order to increase fiscal revenue; this sector is extremely profitable.\" ” The National Development and Reform Commission does not enforce regulations firmly enough. Rong Guangdao believes that such an approach represents a development model that is not based on efficiency. The petrochemical industry has high requirements regarding environmental protection and safety; we are currently using only 70% of our capacity. It’s such a waste. “The NDRC should be strictly questioned to ensure that such practices are truly stopped during the 12th Five-Year Plan period. ”Rong Guangdao said that the National Development and Reform Commission has been talking about adjusting the layout of the petrochemical industry, but its statements have not been bold enough. Those producing less than 1 million tons should be shut down; those producing between 1 million and 2 million tons also need to be encouraged to shut down. The wording is too mild – they should all be shut down. The National Development and Reform Commission has always said that new production capacity must be strictly controlled, but now it’s everywhere in the country – what’s the point of trying to control new additions then? Original news address: http://finance.qq.com/a/20100307/000333.htm Everyone, what do you have to say regarding the current situation of so many new petrochemical projects being launched?
Chinese characteristics: numerous and widespread, operating independently, or is it due to institutional reasons?
At present, Sinopec mainly focuses on expansion, and many of the approval procedures do not require the involvement of the National Development and Reform Commission. In contrast, CNPC, CNOOC, and Sinochem lack such a foundation and need to build new large-scale refineries in order to compete. My guess is that Sinopec seeks approval from the National Development and Reform Commission in order to impose more restrictions on the development of other companies. In fact, Sinopec itself is continuously expanding its production capacity. Of course, it is necessary to restrict small refineries that cause high pollution, and often it is local authorities who are to blame for this. Considering China’s economic growth rate and overall scale, it is not certain that there will be an overcapacity in the petrochemical industry in the future. What if a situation similar to the one with insufficient electricity supply years ago occurs again? Would we have to build facilities on a temporary basis? It is inevitable to shut down small refineries and establish numerous new large-scale integrated petrochemical projects. The National Development and Reform Commission must set clear requirements regarding scale and emission levels, and ensure that these standards are met both technically and administratively.
It makes so much money. CNPC and Sinopec are pretty disgusting
It is obvious that this is Sinopec’s way of deceiving itself; taking advantage of its large number of refineries, it restricts other companies from building their own refineries, rather than seeking solutions within itself. In fact, this reflects Sinopec’s sense of guilt. If you’re capable of managing your own affairs well, then don’t try to give orders to others. How much credit has Sinopec gotten from the National Development and Reform Commission? Disgusting!
The most profitable sector is the refining industry. The cost at the petrochemical plant is 3,000 yuan per ton; it is sold to Sinopec’s sales company at 2,550 yuan per ton. The sales company then sells it to its own gas stations at 8,000 yuan per ton, and to consumers at 8,500 yuan per ton. If private gas stations purchase in bulk, it’s of course 8500. As a result, they all lost money. But the sales company can make a huge profit. Sinopec and CNPC have a monopoly on sales. Although BP has gas stations in the country, it is unable to refine oil; what it sells are two types of oil that it purchases wholesale from elsewhere. Of course, there will be losses. Local refineries in Shandong: oil refining – but there is no oil to refine, as two companies monopolize crude oil imports. Only fuel oil can be used for refining. There are joint-venture refineries, such as those operated by ExxonMobil, but they do not have the right to sell the oil; what is produced there can only be sold at low prices to Sinopec and CNPC.
As far as I know, the most profitable sector is likely the oil extraction sector; within CNPC, it is referred to as the exploration and production sector. Sinopec is similar. This portion is obtained in the form of a resource tax, plus the actual costs of exploration and production. International oil prices have experienced significant fluctuations, especially sharp increases, yet the actual costs of oil extraction have not risen by such large amounts (in some oil fields, the cost of extraction does increase as less oil can be extracted, but not to such an extent). So, as mentioned in the reports, it is stated that Sinopec and CNPC are losing money in their refining operations, yet not a word is said about their highly profitable oil extraction activities. **The increased windfall tax also targets primarily the oil extraction sector.
The poster is referring to refineries with a processing capacity of less than 2 million tons per year. To put it simply, they are mostly refineries that do not belong to those two major oil companies. Small refineries are flexible and can be started or stopped at any time depending on market conditions and profitability. However, small refineries often suffer from insufficient investment, inadequate upgrading facilities, and incomplete waste treatment systems. Product quality assurance and environmental pollution cannot be ignored. Regardless of that barrel of oil, on a national scale, the layout of oil refining facilities is indeed unreasonable. Yet this issue is tied to local interests of various provinces and cities, as well as matters such as employment and social stability. For years, there have been calls to shut down, merge, or restructure small refineries, but these calls remain unimplemented in practice, out of sheer necessity. Furthermore, the ratio of production to refining for these two oil companies is different: CNPC focuses on production with refining as a secondary activity, while Sinopec emphasizes refining with production as a secondary role. This was the main principle established when the two companies were separated by a geographical boundary back then. All the oil refined by CNPC comes from its own production, whereas nearly 60% of the oil refined by Sinopec is imported; another 20-30% comes from CNPC’s output, and the remaining 10-20% is produced internally by Sinopec.
This post was last edited by swl on 2012-4-23 at 20:10. With such high net profits, yet they still provide such substantial annual subsidies. Well, even with those subsidies, workers only end up with around a thousand yuan each.
Restricting other companies from building refineries – with oil prices reaching 10, it’s extremely unscrupulous. Not allowing Formosa Plastics to enter the market is mainly because it’s too profitable.
With such high profits, of course some people want to get a share of them. Alas, it’s only us ordinary people who suffer as a result