What do you think? Will Qingdao Petrochemical, with a production capacity of 5 million tons per year, be relocated?
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The 2023 work report of Shandong Province included the phrase “study and advance the relocation of Qingdao Petrochemical to another location” in it. The People’s Daily, published on January 14, featured an excerpt from Shandong Province’s work report for 2023. It indicated that among the ten key areas of focus for Shandong Province this year, the second one is to make vigorous efforts in the development of major industrial projects, which includes \"studying the possibility of relocating Qingdao Petrochemical’s facilities to another location.\" The reporter noted that this is the first time at the provincial level in Shandong Province that there has been a proposal to study and advance the relocation of Qingdao Petrochemicals, an issue that has long received significant attention from the local residents of Qingdao. Qingdao Petrochemical was formerly the Refinery of Qingdao Handicrafts Administration Bureau, established in 1962; it was fully transferred to Sinopec Group in December 2000. By the end of 2020, the company’s crude oil processing capacity was 5 million tons per year. In terms of location, Qingdao Petrochemical is situated in Licang District of Qingdao City, covering an area of 0.94 square kilometers. The plant is located near Huangdao Oil Port, and it is connected to both Huangdao Oil Port and Qingdao Port terminals via oil pipelines. It also has its own dedicated railway line that connects to the Jiaoji Railway.
In fact, as early as 10 years ago, Qingdao had considered the idea of moving Qingdao Petrochemical there. According to a report in the Urban News in October 2013, Xiang Yangqing, head of Qingdao’s Economic and Information Committee, delivered a report on the city’s efforts to transform and upgrade its industrial sector to the Qingdao People’s Congress that same month, proposing to advance the relocation of Qingdao Petrochemicals and to include 8 companies such as Alkali Industry Co., Ltd. in this year’s relocation plan. At the time, it was reported that the relocation site for Qingdao Petrochemical would be Dongjiakou in Qingdao, through expansion at a different location. Regarding the reasons behind pushing for their relocation, China Environment News cited insiders from Sinopec as saying that among the domestic petrochemical relocation projects, those related to Qingdao Petrochemical, Takahashi Petrochemical, and Guangzhou Petrochemical are the most urgent.
All 3 refineries violated the requirement that refineries should be located away from urban areas. Secondly, in the cities where Takahashi Petrochemical and Qingdao Petrochemical are located, there are respectively Shanghai Petrochemical and Qingdao Refining & Chemical’s refineries with a capacity of tens of millions of tons each, which violates Sinopec’s policy of building only one refinery in each city for refining and chemical production purposes. In October 2015, a report in the Qingdao Morning Post cited Jiang Dezhi, the deputy director of the city’s planning bureau, as saying that the Qingdao Petrochemical Plant located on Binhai Road had been listed as a company subject to relocation, and that various parties were engaged in discussions and making preparations for the relocation process. On the 21st of the same month, the official Weibo account of the Qingdao Environmental Protection Bureau reposted this statement and @ed several media outlets. However, in the years that followed, the Qingdao authorities did not provide any further updates on the progress of relocating Qingdao Petrochemical until bidding procedures were launched in 2020.
In April 2020, Sinopec Qingdao Petrochemical Co., Ltd. issued a public tender for the \"Pre-assessment Services for Land and Assets Related to the Relocation of Qingdao Petrochemical’s 3.5 million tons per year oil refining production facility.\" The scope of this tender included an assessment of the current value of the land, an assessment of the current value of the assets, plans for the land’s future use, an assessment of the land’s value after any changes in its use, as well as costs associated with soil remediation. Furthermore, the announcement states that the winning bidder is required to provide technical and policy support regarding the valuation of land and assets for the negotiations between Sinopec Qingdao Petrochemical Co., Ltd. and local authorities, to participate in the negotiations between Sinopec’s headquarters and local authorities, and to offer technical and policy support related to the valuation of land and assets. However, Sinopec has remained low-key on this matter. In August 2020, Han Hongyan, a second-level inspector at the Qingdao Ecology and Environment Bureau, appeared on the “Online Consultations” section of Qingdao’s government website to answer citizens’ questions regarding whether the emissions from companies such as Sinopec Qingdao Petrochemical Co., Ltd. met regulatory standards and when these companies would relocate. Han Hongyan said, “The environmental protection department will continue to carry out environmental law enforcement inspections on Sinopec Qingdao Petrochemical Co., Ltd., to ensure that pollutants are discharged within specified limits and to safeguard environmental safety.” Upon inquiry with the company, there are no plans for relocation at present.
Sinopec plays a significant role in the economic development of Qingdao. During the 2022 Qingdao ** event, Wang Mingzhang, a representative of the Qingdao People’s Congress and general manager of Sinopec Qingdao Petrochemical Company, told the media that in 2021 Sinopec’s tax contributions to Qingdao exceeded 15 billion yuan. Public information shows that in 2021, Qingdao’s general public budget exceeded 130 billion yuan for the first time, which means that Sinopec contributed over 1/10 of the local revenue.
The so-called relocation is actually reconstruction in a different location. The Qingdao Petrochemical mentioned today traces its origins to the former Qingdao Oil Refinery; as it had a caprolactam production facility in its production chain, it was not acquired by Sinopec during the merger of local refineries at the end of the last century. But around the year 2000, it was restructured into a petrochemical company under Sinopec. It is one of the few local refineries in Shandong that has managed to succeed amid the wave of mergers among local refineries. It is estimated that that piece of land, which is less than 100 hectares in size, must have appreciated significantly since the merger; by moving away from there, one could use that capital to establish a new refining company. Many refineries in Shandong did not end up in such a good situation.
The former Qingdao Refinery has contributed significantly to the local economy. Sinopec simply picked the peaches that had already ripened and gave them to Qingdao City. When I first started working, I also went to the Qingdao Refinery (it was called that at the time) to assist with the industrial calibration of the hydrogenation units. That area is Qingdao’s heavy industry zone (steel mills, Sifang Vehicle Factory, alkali plants, etc.), and Shuangliu Airport is located nearby (it is no longer an airport now). It's good to move away; there’s room for growth and a new environment.