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Since the beginning of the new century, the scale of refineries in our country has continued to expand, with an increasing trend toward larger-scale facilities. Sinopec and CNPC rose from being the fourth and eighth largest refining companies in the world in 2000 to the second and fifth largest respectively by 2011, with some of their refineries having reached world-class scale. Overall, the development of China’s refining industry in recent years has shown the following trends: 1. Rapid growth in refining capacity, optimization of the industrial layout, and the initial formation of a diversified landscape of market players. Since the turn of the new century, China’s refining industry has seen its overall scale expand swiftly, thanks to reforms, greater openness, and intensified adjustments, through a combination of upgrades, expansions, and new constructions. The national refining capacity increased from 277 million tons in 2000 to 710 million tons in 2014. At present, China has become the world’s second-largest oil refining country after the United States, and it also boasts the fastest growth in refining capacity since the beginning of the new century. In terms of layout, while China’s refining capacity has been growing rapidly, it has focused on adjusting and optimizing its layout with the consumer market as the core, resulting in positive changes in the regional distribution. In 2011, the total refining capacity in the Bohai Rim, Yangtze River Delta, and Pearl River Delta regions – which are the main oil-consuming areas in China – was 367 million tons, accounting for about 68% of the country’s total refining capacity. Among them, the refining capacity in the Bohai Bay region is 210 million tons, accounting for about 39% of the country’s total refining capacity ； The Yangtze River Delta region accounts for 82 million tons, accounting for about 15% ； In the Pearl River Delta region, it is 75 million tons, accounting for about 14%. Compared to 2005, the share of refining capacity in South China, which previously had insufficient capacity and required large amounts of oil to be imported, increased by 5.4 percentage points in 2010 ； The proportion of the Northeast region with excess capacity requiring outward transfer decreased by 5.8 percentage points ； In the Northwest region, where consumption is relatively low and oil products must be imported from elsewhere, the proportion of its consumption saw a slight decline despite the addition of new or expanded refining capacity ； With the advancement of the development and revitalization plans for the central region, the share of North China and Central China increased slightly, by 2.6 and 0.08 percentage points respectively ； The southwestern region, which has long had low refining capacity, is currently building two large refineries, and the situation there is set to improve gradually in the near future. 2. The trends of scaling up, integration of refining and petrochemical processes, industrial clustering, and the development of industrial bases have been steadily advancing, with an increasing degree of intensification. Since the beginning of the new century, the scale of refineries in China has continued to grow, and the trend toward larger-scale facilities has persisted. Sinopec and CNPC rose from being the fourth and eighth largest refining companies in the world in 2000 to the second and fifth largest respectively by 2011, with some of their refineries having reached world-class scale. By the end of 2007, the refining capacity of Zhenhai Refining & Chemical Co., a subsidiary of Sinopec, reached 20 million tons per year (it is currently 23 million tons per year) ； In 2008, after its renovation and expansion, Dalian Petrochemical’s refining capacity reached 20.5 million tons per year, enabling it to join the ranks of world-class refineries with a refining capacity of over 20 million tons per year. By the end of 2011, the average capacity of the refineries owned by Sinopec and CNPC had reached 7.06 million tons per year and 6.51 million tons per year, respectively. Currently, Sinopec has initially formed three major refining clusters in the Bohai Rim, the Yangtze River Delta, and the Pearl River Delta. The combined capacity of its refineries with a capacity of 10 million tons or more accounts for 58% of its total refining capacity ； Maoming Petrochemical is undergoing renovation and expansion; its refining capacity will increase from 13.5 million tons per year to 25.5 million tons per year, enabling it to join the ranks of world-class refineries. China National Petroleum Corporation has established eight major oil refining production bases with a capacity of 10 million tons each, comprising Dalian Petrochemical, Dalian West Pacific, Fushun Petrochemical, Jilin Petrochemical, Liaoyang Petrochemical, Lanzhou Petrochemical, Dushanzi Petrochemical, and Guangxi Petrochemical. At present, China has 20 oil refining complexes with a capacity of 10 million tons each, and their combined refining capacity accounts for 45.9% of the country’s total refining capacity ； Another batch of ten-million-ton-level oil refining bases has been approved and is currently under construction. Of the existing 20 refining bases with a capacity of 10 million tons or more, 14 are equipped with ethylene plants, thereby effectively leveraging the industrial synergy brought about by integration of refining and petrochemical operations, as well as the driving and radiating effects of industrial clusters. Meanwhile, the scale of various oil refining units in China is also trending toward larger sizes: the maximum capacity of atmospheric and vacuum distillation units reaches 12 million tons per year; for hydrocracking, it is 4 million tons per year; and for delayed coking, it is 4.2 million tons per year. All these figures rank among the highest globally for similar types of units. 3. The structure of refining facilities has been continuously adjusted, with improvements in deep processing, precision processing, and the ability to process different types of crude oil. Efforts to reduce energy consumption and emissions have also been ongoing. To address high international oil prices, reduce refining costs, increase the capacity to process sulfur-containing crude oil, and meet the increasingly stringent domestic standards for oil quality, China has been constantly adjusting the structure of its refining facilities since the beginning of the new century, thereby enhancing its capabilities in deep processing, precision processing, and handling various types of crude oil. In China’s refining processes, the proportion of catalytic cracking capacity in the total capacity for processing crude oil has been declining steadily, dropping from 36.1% in 2000 to 30.25% in 2011. The deep processing hydrogenation units for producing clean petroleum products have seen rapid growth, and have become one of the key units in China’s refining processes. The proportion of hydrorefining capacity in the total crude oil processing capacity rose from 15.6% in 2000 to 32.2% in 2011. The share of delayed coking capacity required for processing heavy oil in the total crude oil processing capacity increased from 7.7% in 2000 to 14.3% in 2011. China’s processing capacity for sulfur-containing crude oil has reached over 80 million tons per year, while the processing capacity for highly acidic crude oil has exceeded 20 million tons per year. At present, our country has basically mastered the full-process technologies for modern refineries, and possesses the capability to build large-scale refineries with a production capacity of tens of millions of tons using its own technologies. It also holds a number of core technologies and proprietary technologies with independent intellectual property rights, some of which are exported abroad. “Since the 11th Five-Year Plan period, China’s refining industry has made significant efforts to reduce energy consumption and emissions, achieving notable results with a marked improvement in resource utilization efficiency. Both Sinopec and CNPC completed their energy conservation and emission reduction targets for the 11th Five-Year Plan ahead of schedule. The average comprehensive merchandise ratio of the two groups in 2010 was 1.6% higher than that in 2005 ； The comprehensive energy consumption in oil refining has decreased by an average of 12.8 kg of standard oil per ton compared to 2005. In 2010, Sinopec’s COD emissions decreased by 18% compared to 2005, while its sulfur dioxide emissions dropped by 35% on a year-on-year basis ； The COD emissions of China National Petroleum Corporation decreased by 33% on a year-on-year basis, while sulfur dioxide emissions dropped by 13%. 4. The processing volume of crude oil and the production volume of refined oil have continued to increase, meeting domestic demand well. Since the turn of the new century, China’s economy has developed rapidly, with a sharp rise in the production and sales of automobiles as well as significant progress in transportation. This has led to a continuous and rapid increase in China’s consumption of refined oil; the total consumption of gasoline, diesel, and other fuels rose from 111 million tons in 2000 to 263 million tons in 2011. Although the growth rates of consumption for gasoline, diesel, and kerosene vary, all have shown an accelerating trend with faster growth in the last five years compared to the first five. Among them, gasoline consumption increased from 35.05 million tons in 2000 to around 76.4 million tons in 2011, with an average annual growth rate of 7.3% ； Diesel consumption increased from 67.74 million tons in 2000 to about 167 million tons in 2011, with an average annual growth rate of 8.5% ； Kerosene consumption increased from 8.7 million tons in 2000 to about 18.27 million tons in 2011, with an average annual growth rate of 7.0%. It can be seen that over the past 12 years, diesel consumption has grown the fastest, followed by gasoline, and kerosene thereafter. The strong growth in demand has largely offset the negative impacts on China’s refining industry caused by high international oil prices, policy-related losses, and the financial crisis; as a result, both crude oil processing volume and the output of refined products have shown continuous double-digit growth. Crude oil processing volume increased from 210.8 million tons in 2000 to 448 million tons in 2011, with an average annual growth rate of 7.1%. The total production of gasoline, diesel, and kerosene increased from 117.1 million tons in 2000 to 267 million tons in 2011, with an average annual growth rate of 7.8%. Among them, gasoline production increased from 41.34 million tons in 2000 to 81.30 million tons in 2011, with an average annual growth rate of 6.3% ； Diesel production increased from 70.8 million tons in 2000 to 167 million tons in 2011, with an average annual growth rate of 8.1% ； Kerosene production increased from 8.72 million tons in 2000 to 18.67 million tons in 2011, with an average annual growth rate of 7.2%. The growth in the production of gasoline, diesel, and kerosene has been roughly in line with the growth in consumption. Due to strong domestic demand, China’s main motor fuels shifted from a net export of 6.8 million tons in 2000 to a net import of 7.63 million tons in 2010. Although the net import volume decreased in 2011, it still reached around 4.8 million tons. 5. The pace of improving the quality of petroleum products has accelerated, progress has been made in adjusting the composition of these products, and the development of alternative fuels is on the rise. Since the beginning of the new century, in order to reduce the environmental impact of vehicle emissions, China’s refining industry has sped up the process of improving the quality of petroleum products, covering in less than 10 years the distance that Europe and the United States took until 2030. Following the elimination of lead from gasoline in 2000, in 2003 the sulfur content limit for gasoline was reduced from 2000 mg/L to 800 mg/L, while the sulfur content limit for diesel was reduced from 5000 mg/L to 2000 mg/L. At the same time, limits were set for the levels of benzene, olefins, and aromatics in gasoline for the first time. Starting from July 1, 2005, the sulfur content requirement for gasoline and diesel in our country was further reduced to 500 mg/L. Starting from January 1, 2008, Beijing began to implement the Beijing Standard IV for vehicle gasoline and diesel in preparation for the Olympics ； Starting from November 1, 2009, Shanghai implemented the Hu IV standard for vehicle gasoline and diesel in preparation for the World Expo ； Starting from August 1, 2010, Guangzhou implemented the Guangdong IV standard for vehicle gasoline and diesel to prepare for the Asian Games. Beijing, Shanghai, and Guangzhou have taken the lead in implementing local standards for vehicle gasoline and diesel that are equivalent to Euro IV emission standards, with the sulfur content requirement reduced to 50 ppm in all cases. Starting from July 1, 2010, China began to implement the National Standard III for vehicle gasoline nationwide, reducing the sulfur content requirement to 150 ppm. In 2011, due to policy-induced losses for domestic refining companies, it took time to implement the technical upgrades required in some refineries, which led to a shortage of diesel supply in the second half of the year. Moreover, diesel has a broader and more complex range of users compared to gasoline, which added to the difficulties associated with these upgrade processes. Therefore, the plan to implement the National III standard for diesel starting from July 1, 2011 was postponed; its implementation across national highways, provincial roads, and other gas stations was delayed until the end of January 2012, with the sulfur content in diesel further reduced to 350 ppm ； The use of gasoline that meets National IV standards was also postponed until January 2014 for nationwide adoption. During this period, China’s refining industry continued to adjust and optimize its product structure, with the proportion of light oils increasing further. While fuel oil production declined, the output of chemical-grade light oils rose, and the share of high-value products such as high-octane clean gasoline and premium lubricants increased significantly. In 2010, the light oil yield of Sinopec and CNPC both exceeded 75%. “During the 11th Five-Year Plan period, the proportion of high-octane gasoline produced by China National Petroleum Corporation increased from 39% to 67% ； The proportion of high-grade lubricants produced increased from 41% to 67%. The country now has a capacity of over 1.2 million tons per year for producing API II and III lubricants via the hydrogenation method. By the end of 2010, Sinopec’s production ratio of high-octane gasoline reached 93.34%, an increase of 4.04 percentage points compared to the previous year, while the production of chemical light oil increased by 30.2% on a year-on-year basis. The production ratio of diesel to gasoline at these two companies is also adjusted in a timely manner according to market demand and the consumption ratio of diesel to gasoline. High international oil prices have driven the rapid global development of alternative fuels. Since 2004, the production of various alternative fuels in our country has been increasing year by year, their adoption has been expanding gradually, and the development of electric vehicles has also begun. Overall, the replacement of gasoline is clearly faster than that of diesel. In 2010, China’s production of fuel ethanol reached 1.8 million tons. That year, the consumption of ethanol gasoline accounted for one-quarter of the country’s total gasoline consumption. In the five provinces of Heilongjiang, Jilin, Liaoning, Henan, and Anhui, as well as in 27 cities in Hebei, Shandong, Jiangsu, and Hubei, the use of ethanol gasoline in vehicles had largely replaced conventional gasoline. Our country has become the third largest producer and user of biofuel ethanol, after Brazil and the United States. The trial implementation of using methanol to blend gasoline and produce methanol gasoline is currently underway. “The two standards, “Methanol for motor vehicle fuel” and “Methanol gasoline for motor vehicles (M85)”, were officially implemented in 2009. While overcoming certain technical and economic challenges, methanol-blended gasoline has begun to be piloted in Zhejiang, Shanxi, and Shaanxi provinces. Coal-to-liquids technology is currently being gradually explored and developed. At present, the combined production capacity of coal-to-liquids projects either in operation or under construction in China has reached 1.68 million tons per year. The Shenhua 1.08-million-ton-per-year direct coal liquefaction project, a key demonstration project in this field, was put into operation at the beginning of 2010. In many key cities across the country dedicated to promoting natural gas vehicles, CNG vehicles have been introduced; there are now over 1 million gas-powered vehicles nationwide. The standard for biodiesel blend fuel (B5) **was officially implemented in February 2011. In November 2010, after the 60,000 tons per year biodiesel plant operated by CNOOC came online, it was first put into trial sale at some gas stations in Hainan Province. The aviation biofuel developed and produced by China National Petroleum Corporation using jatropha oil as raw material has successfully undergone flight tests. The national biodiesel production capacity, using waste cooking oil, oil mill residues, and oilseeds as raw materials, has exceeded 100,000 tons per year. Furthermore, driven by the favorable policies introduced in recent years, the development of electric vehicles in our country has now begun in full swing. Overall, the development of alternative fuels in our country is still in its infancy; the proportion of alternatives used is not high, and various technical, economic, and developmental issues remain to be addressed step by step.