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What Are the Achievements of Dalian West Pacific Refinery’s 20-Year Joint Venture? [With In-Depth Analysis] Energy Intelligence: On the 20th anniversary of its operation, Dalian West Pacific Petrochemical Co., Ltd. has presented an impressive report to the government, society, and its shareholders. As of August this year, the company has processed over 140 million tons of crude oil in total, generating sales revenue of 520 billion yuan, paying **taxes amounting to 78.5 billion yuan, and distributing dividends of 2.15 billion yuan to its shareholders. It has successfully turned around its financial situation; it is expected to achieve a profit of 1 billion yuan for the whole year, thus kicking off the 13th Five-Year Plan on a positive note. Dalian West Pacific is China’s first large-scale Sino-foreign joint venture petrochemical enterprise, established with the approval of the State Council and through joint investment by Chinese and French shareholders. Its registered capital amounts to $1.013 billion. Construction began in 1996, and normal production commenced at the end of 1997. Its shareholders include PetroChina Company Limited, Sinochem Group, Total S.A. of France, Sinochem (**) Company, and Dalian Construction Investment Company. In accordance with the decision made at the 102nd meeting of the State Council’s Premier’s Office, it came under the full management of China National Petroleum Corporation, becoming a highly representative and influential Sino-foreign joint venture in the petrochemical industry. It has been part of and witnessed China’s historical process of reform and opening up, with over a dozen central government leaders visiting it for inspections. Since its establishment, the company has always pursued the goals of \"innovation, excellence, and performance.\" Aiming to become a leading domestic and first-class international refinery, it has explored ways to develop joint-venture refineries by focusing on innovations in institutional mechanisms, business operation models, and production management methods. It has established a production control system centered on the \"Four Haves working method,\" with the integration of operating procedures, production adjustments, and emergency management as key requirements. Additionally, it has developed a system for ensuring the long-term reliable operation of equipment through regular maintenance, major overhauls, and shutdown repairs. These efforts have provided valuable experience for the development of the industry and served as a model for others to follow. At the same time, the company prioritizes ** and the interests of the group, takes active roles in regulating the market, and fulfills its economic, political, and social responsibilities. It has established a reputation as an honest and responsible enterprise in society, enjoying high recognition and goodwill within the industry. After 20 years of development and growth, the company has developed distinct characteristics and advantages: First, its institutional mechanisms are advanced; it fully adheres to modern corporate systems by separating decision-making authority from management authority ； It has the flexibility to set prices, enabling it to respond effectively to market changes. Secondly, there are significant economies of scale: 18 main processing units have been installed, and the production process is designed as a single series, single flow, and fully hydrogenated process. The processing capacity of each individual unit is high, resulting in a high degree of production concentration. Thirdly, its HSE performance is outstanding. It has established a production control management system known as the “Four-Have Working Method”. It has successfully completed three “three-year maintenance cycles” and two “four-year maintenance cycles” in succession. Its HSE performance ranks among the top of Total’s refineries worldwide. Fourth, it operates with flexibility; its crude oil and refined oil operations rely on supplies from outside the country, and it has accumulated extensive experience in making use of \"two types of resources and two markets.\" It also has a wide network of stable major clients overseas. Fifth, the organization is streamlined and efficient, adopting a flat structure with centralized management; it has a reduced number of departments and staff. Functions such as transportation, inspection and maintenance, and logistical support are handled through socialized services, keeping the total number of employees at less than 1,000. Sixth, it boasts significant geographical advantages: located in the Northeast and facing the Asia-Pacific region, it is surrounded by seas on three sides. It is adjacent to deep-water ports such as Dayaowan Port and Beiliang Port, boasting convenient land and sea transportation facilities as well as favorable conditions for participating in international competition. “During the 12th Five-Year Plan period, the company invested over 2 billion yuan in carrying out the \"two constructions, two supporting facilities, and two upgrades\" development project, which included annual capacity for 1.5 million tons of catalytic reforming and 1.2 million tons of gasoline hydrogenation. As a result, the company was able to reach a production scale of tens of millions of tons; the quality of its gasoline and diesel met the National V standards. Its production processes became more sophisticated, its processing methods more flexible, its product structure more rational, its operational management more efficient, its key performance indicators more advanced, and its profitability more significant, demonstrating strong growth potential. How Dalian Xipai Petrochemical Maximizes the Efficiency of Its Refinery / By Liu Chuchun, Dalian Xipai Pacific Petrochemical Co., Ltd. Dalian Xipai Pacific Petrochemical Co., Ltd. (hereinafter referred to as Xipai) is a Sino-French joint venture in the petrochemical industry managed by China National Petroleum Corporation. With a crude oil refining capacity of 10 million tons per year, since its operation began in 1996, the company has continuously drawn on advanced management concepts and practices from the Western refining industry, while also taking into account China’s national conditions and the achievements of China’s refining sector, thereby developing a corporate management and operational model that combines elements from both Eastern and Western approaches. Drawing on over a decade of exploration and practice by PetroChina West Pacific, this paper explores how the oil refining industry can maximize its efficiency by establishing an organizational structure suited to the market economy, a market-oriented business model, and an optimized operational organization aimed at achieving maximum benefits. 1 Establish a management and operational system that conforms to market principles and operates efficiently. To truly achieve the goal of maximizing profitability, it is necessary, in the author’s view, to first change the management model in which production plays a dominant role, and shift toward a model in which operations take precedence. Both the group companies and the production units urgently need to set up \"navigation\" centers that enable a business philosophy centered on the market while relying on production to ensure maximum profitability. Regarding business process reengineering, it is necessary to ensure the implementation of these concepts through appropriate systems and mechanisms, in order to create a rational information flow for production and management (see Figures 1 and 2); this is also a common practice among Western oil refining giants. As the name implies, the \"navigation\" center acts as the helmsman of an enterprise; its functions include market forecasting (analyzing and predicting the market in the long term, short term, and immediate future), solution optimization (using mathematical models to effectively evaluate various options and select the best one), plan formulation (creating annual, monthly, and daily plans, formulating production and coordination instructions, and making arrangements), procurement guidance (purchasing crude oil at the most economical price), and sales coordination (meeting market expectations and providing relevant services). The first three functions are essential. The function of the “Navigation” center within the group’s companies is to carry out and coordinate tasks, as well as to refine plans. The market often faces imbalances between supply and demand, which can even lead to social panic. The root cause lies in managers’ inaccurate forecasts of the market, as well as their lack of the ability to respond quickly and to adjust product portfolios accordingly. For existing refineries, whose processing routes have already been determined, the goal is to accurately analyze and assess changes in short-term and future market demands, make full use of the existing facilities, select the most economical crude oil, produce the most competitive products as quickly as possible, and achieve maximum profitability ； For newly built refineries, it is essential to forecast the long-term future demand structure for refined oil products in the market, as well as the trends in crude oil resources (such as proven reserves and actual production capacities of various oil types), so as to maximize future profitability. 1.1 Strengthening forecasts for future markets: For export-oriented refineries, due to the time difference between the two markets, current production and operational activities are primarily based on previously anticipated plans. Of course, auxiliary measures can also be adjusted through limited structural adjustments. In other words, if we do not make market forecasts or make inaccurate judgments about the market, production will be carried out in a blind manner, which will lead to an imbalance between supply and demand and thus market instability; as a result, it becomes impossible to maximize the profitability of the enterprise. Therefore, it is more important to strengthen predictions about future markets than to understand the current market. 1.2 Enhancing resilience to current market conditions The market is in constant change, and both coastal and inland enterprises operate in an environment where demand is subject to fluctuations. There are often discrepancies between the actual market conditions and those anticipated, which necessitates the establishment of rapid-response mechanisms at various levels to adjust the supply and demand balance in the market ； Oil and petrochemical companies should establish rapid-response mechanisms for logistics scheduling and processing capacity adjustment, equipped with market early-warning systems. Manufacturing enterprises should have mechanisms for quick adjustment of their product portfolios, while all stages should feature reasonable inventory management systems to avoid imbalances between supply and demand. 1.3 Build a strong marketing team. Market information and analysis forecasts serve as important bases for a company’s strategic development, transformation, long-term plans, and short-term plans. A lack of forecasting, research, and judgment regarding future markets will lead to randomness in a company’s investments and plans. In a technologically advanced environment with well-equipped facilities, making predictions is more important than simply understanding the current market. 1.2 Enhancing resilience to current market conditions The market is in constant change, and both coastal and inland enterprises operate in an environment where demand is subject to fluctuations. There are often discrepancies between the actual market conditions and those anticipated, which necessitates the establishment of rapid-response mechanisms at various levels to adjust the supply and demand balance in the market ； Oil and petrochemical companies should establish rapid-response mechanisms for logistics scheduling and processing capacity adjustment, equipped with market early-warning systems. Manufacturing enterprises should have mechanisms for quick adjustment of their product portfolios, while all stages should feature reasonable inventory management systems to avoid imbalances between supply and demand. 1.3 Build a strong marketing team. Market information and analysis forecasts serve as important bases for a company’s strategic development, transformation, long-term plans, and short-term plans. A lack of forecasting, research, and judgment regarding future markets will lead to randomness in a company’s investments and plans. A technologically advanced refinery with well-equipped facilities may see its production deviate from market demands due to inaccurate market assessments, and its competitiveness may be weak as a result of inappropriate facility setup and crude oil selection ； Similarly, a processing plan that appears highly scientific and rigorous in theory will lack competitiveness if it lacks an accurate assessment of the market. Therefore, it is necessary for enterprises to establish a high-quality market team with a strong sense of market awareness within a \"navigation\" center, so as to capture information in a timely and efficient manner. After screening, this information can be used as a reference for decision-makers to aid in setting product prices. 1.4 Improving information collection methods: We live in an era of high informatization, where major events that occur in any corner of the world can be spread throughout the globe in no time. Events related to oil naturally affect oil prices as well as the prices of oil derivatives. Given the high degree of interdependence among various sectors of society, events seemingly unrelated to oil can also affect oil prices and the prices of oil derivatives to varying extents. Therefore, modern enterprises must make full use of advanced communication tools to obtain information through various channels, such as purchasing or establishing information-sharing partnerships. 1.5 Establish an organizational structure that is responsive, has streamlined business processes, and high work efficiency. To ensure the effective implementation of the company’s production and operation strategies, it is necessary first to provide organizational support by building a management team with excellent qualifications, the ability to respond quickly to market changes, proficiency in handling business processes, and high work efficiency. Dalian Xitai University* draws on the experience of its foreign shareholders to enhance its “navigation” functions, integrating operations such as production planning, fuel blending, crude oil procurement, product sales, market information, transportation scheduling, and operational analysis into a business management department. Among these, the planning team serves as the company’s true “navigation” team. Information from the external crude oil market, refined oil market, and transportation market, as well as data on production and operations from within the company (via the OA office system), is efficiently transmitted to this “navigation” team. Using linear modeling tools such as PIMS and ORION, this team formulates and issues daily plans for production, processing, procurement, and sales, with the goal of maximizing efficiency. This organizational structure has addressed past drawbacks such as slow information flow between business departments, mutual constraints, lack of coordination, and unclear market objectives. Practice has proven its effectiveness. The “navigation” center of the French TOTAL group is divided into several teams, with each team responsible for “guiding” 2 to 3 refineries. The goal of this navigation center is to maximize the group’s profitability; there is extensive information sharing among the different navigation teams, while the refineries are primarily in charge of operational execution and cost control. 2. Aiming to improve the cost-effectiveness of crude oil, it is necessary to control its costs. Crude oil accounts for over 90% of a refinery’s total costs, which is why it receives significant attention. Refineries that process imported crude oil generally have more diverse supply channels, offering a wider range of options; however, the transportation process is also more complex. Therefore, there is much room for reducing the costs associated with purchasing crude oil. 2.1 The supply of crude oil aims to combine futures and spot markets; it requires not only a stable source of supply but also competitive crude oil prices. Foreign experience shows that purchasing crude oil futures can effectively address the issue of stable supply, while spot crude oil offers certain market opportunities. These opportunities facilitate adjustments to the product mix and processing load, optimize refinery processing plans, and enable a rapid response to market changes. The ratio of futures to spot varies depending on factors such as assessments of the expected availability of resources, changes in supply and demand, the strength of the spot market, as well as differences in operational practices; Western refineries generally maintain a crude oil futures ratio of around 60%. Since futures represent a direct source of supply, and their price is the official selling price (i.e., OSP), it is necessary to make a basic assessment of future supply dynamics when determining their proportion. When crude oil supply is relatively tight and prices are expected to keep rising, the proportion of futures should be set slightly higher; conversely, the opposite applies. 2.2 Make full use of the pricing mechanisms for various oil types in different resource regions to mitigate crude oil price risks. In the future, aside from Russian crude oil imported via land pipelines from the northeast and Kazakhstani crude oil imported from the northwest, most of the crude oil imported into China will be shipped by sea from the Far East, the Middle East, West Africa, and the Americas. Far East crude oil includes Southeast Asian crude priced on the Brent benchmark or Indonesia’s official price, Australian crude, and Russian crude priced in Dubai; the shipping time ranges from 4 days to 2 weeks ； Most Middle Eastern crude oils use Dubai and Oman crude oils as reference prices, with a shipping time of about 3 weeks ； Most crude oil from West Africa uses Brent crude as its benchmark price, with a shipping time of about 5 weeks ； Due to bottlenecks at the Suez Canal, North African crude oil is typically transported via VLCCs taking a route around Cape Horn in South Africa. This route takes about 7 weeks, resulting in a relatively long transportation distance and higher costs ； South American crude oil generally uses WTI as its benchmark price; the shipping time is around 6 to 7 weeks. As domestic crude oil supply in the United States is increasing rapidly, imports have declined, and some South American crude oils are seeking new target markets, especially countries such as India, Singapore, and China. Brent crude oil can also be used as a benchmark price, offering more flexible sales options. There are also significant differences in the pricing periods for various oil types across different regions. For example, crude oil from the Gulf of Persia is typically priced based on the average price for the entire month in Dubai/Oman, whereas African crude oil priced using the Brent benchmark is usually priced based on the average price over five pricing days surrounding the shipment date. Sharp fluctuations in oil prices will undoubtedly pose price risks to processing enterprises. For example, when purchasing low-sulfur crude oil, for the batch arriving in month M, one can choose Russian oil priced in Dubai or Southeast Asian crude oil priced in Brent for delivery in the same month; or one can purchase West African/North Sea crude oil priced in Brent with delivery in month M+1; or one can purchase South American or North African crude oil priced in WTI or Brent with delivery in month M+2. In other words, within the same delivery period, it is possible to purchase various types of crude oil with different pricing periods and benchmarks. However, fluctuations in oil prices cause significant variations in the price differences between them, which creates considerable risks for refineries in terms of obtaining the crude oil that offers the best cost-performance ratio as desired. This remains a persistent challenge for refineries when purchasing crude oil. In response to this, refineries can adopt measures such as hedging against price differences between benchmark crude oils like Brent and Dubai, as well as rolling over crude oil contracts, in order to switch pricing benchmarks and periods, thereby eliminating price volatility risks caused by factors such as transportation time differences. Of course, this also requires a basic judgment and understanding of the overall crude oil prices and the trend of benchmark crude oil price spreads. 2.3 Understanding supply and demand in the transportation market to reduce transportation costs: Transportation costs represent an important component of the cost of crude oil; optimizing logistics effectively and understanding the patterns and timing in the shipping market are key to reducing these costs. The tanker shipping industry is a relatively mature market; through shipping associations, shipowners, and brokerage firms, it is possible to understand the current situation and development trends of tankers worldwide, particularly the total carrying capacity of different vessel types. By taking into account changes in the volume of crude oil and refined oil transported by sea as well as trade patterns, it is feasible to predict the balance between supply and demand for shipping capacity. During specific voyages, it is also possible to use the aforementioned channels to obtain information on the supply of seagoing vessel capacity, vessel status, the distribution of chartering and loading periods, as well as the pace of market transactions, thereby formulating a well-structured chartering strategy. Due to seasonal demand, the supply and flow of crude oil may change ； The climate can affect sailing speed ； Political factors may change the supply and flow of crude oil. These factors will undoubtedly affect the balance of shipping capacity and freight indices in the long run, and studying these patterns of change will help improve the ability to manage the market. To effectively control crude oil transportation costs, a combination of \"time chartering\" (rental for a specified period) and \"voyage chartering\" (rental per voyage) is a good option; success depends on the accuracy of market analysis and forecasting as well as the efficiency of operations. “\"Time chartering\" can help achieve the goals of target cost management, but it involves price risks ； “\"Charter shipping\" always reflects the changes in the transportation market, and there is also price uncertainty. Therefore, after weighing the pros and cons, combining the two should be a good strategy. In addition, the industry also has a partnership model involving the signing of COA (charter contract) agreements with shipowners, whereby the charterer and the shipowner agree on the volume of cargo to be transported and the capacity to be provided over a certain period; typically, the shipowner offers a discount based on market rates at that time. Through this arrangement, shipowners can secure their market share, while charterers can achieve a certain degree of stability in shipping capacity and reduce freight rates. Therefore, choosing a shipowner with good ship condition and operational management to sign a COA is a reliable way to control crude oil transportation costs. 2.4 Creating conditions for using VLCCs for transportation: As the volume of cargo transported per vessel increases, the cost per unit of crude oil transported decreases. At the same time, however, the crude oil storage capacity of suppliers and refineries needs to be increased; the fluctuations in crude oil inventory levels will become greater, and more working capital will be required to purchase crude oil. For a refinery with a processing capacity of 30,000 tons per day and an average crude oil inventory of 300,000 tons, transportation is carried out using either SUEZMAX or VLCC vessels; the changes in inventory are shown in Figure 3. Therefore, the economic viability of choosing between SUEZMAX and VLCCs should be determined based on the refinery’s processing capacity, the difference in freight indices for the two vessel types, and port conditions. To fully leverage the advantages of VLCC transportation, the following methods are available: ① Loading at one port and unloading at the same port ； ②One port loading, two ports unloading ； ③Double-port assembly, single-port unloading ； ④Load at Shuanggang, unload at Shuanggang ； ⑤Two refineries collaborate on assembly ； ⑥VLCCs are used for long-distance transportation, followed by short-distance delivery using smaller ships. The most cost-effective approach varies depending on the time and circumstances. Dalian Xitai proactively strengthens information exchange with nearby refineries to create opportunities for cooperation. It optimizes transportation methods by taking into account factors such as the difference in freight rates between different ship types, as well as considerations related to loading and unloading ports, loading dates, and delivery dates. This approach has yielded good results in terms of maintaining reasonable inventory levels and reducing transportation costs. 2.5 Moderately enhance the ability to process crude oil containing sulfur and acids. As previously mentioned, the supply-demand relationship is the main factor influencing oil prices. For processing low-sulfur crude oil, traditional refining technologies can already meet the requirements. For the processing of crude oils with high sulfur content, the main approaches currently used are hydroprocessing, or coking and coke production routes. Compared to processing low-sulfur crude oil, the technological process for processing high-sulfur crude oil is longer, requires greater investment, and results in higher processing costs. When determining the processing route for a new oil refinery, it is necessary to consider the differences in processing costs and product profiles between the two. Based on the base price of crude oil, the price differential between high-sulfur and low-sulfur crude oils should be established. Only if the market price difference between high-sulfur and low-sulfur crude oils exceeds this value will refineries processing high-sulfur oil be more competitive. For a long time now, high-sulfur crude oil has been more attractive in terms of price compared to low-sulfur crude oil. The future production capacity and processing of high-sulfur crude oil have attracted attention, and China’s coastal refineries are either upgrading or expanding their capabilities to process such crude oil. The author believes that in the near term, as the world’s capacity to refine sulfur-containing crude oil increases, the price differential between high-sulfur and low-sulfur crude oils will significantly narrow. Given the enormous capital investment required for processing sour crude oil, and with a view to ensuring the economic viability of refineries and avoiding blind investments, it is recommended to control the scale of capacity for refining sour crude oil. The extent of this scale should first be determined by the **energy strategy**, and secondarily by market dynamics. Among the global new crude oil production capacity, the proportion of sour crude oil has increased. The difficulty in processing acid-containing crude oil lies in the high density of the oil and its acidic impurities, which cause severe corrosion to the equipment, making processing quite challenging. Currently, there are not many oil refineries in China capable of processing acidic crude oil, and they generally lack the necessary processing capabilities. In recent years, the price of sour crude oil has also been more than $10 per barrel lower than that of other oil grades with similar quality indicators. Both from a resource strategy perspective and in terms of enhancing the profitability of refineries, this deserves great attention so as to gain a competitive edge in the market. 2.6 Making full use of price differences among crude oils of different qualities As the world’s crude oil consumption market grows, crude oil resources decline, and new resources are discovered, the supply situation in the crude oil market is constantly changing. The production capacity of conventionally easy-to-process crude oil is declining, while that of sulfurous and acidic heavy crude oil is increasing. Various crude oil prices fluctuate continuously due to changes in production capacity and demand. Over the past 10 years, the price changes of high-sulfur and low-sulfur crude oils, as well as light and heavy crude oils, are shown in Figures 4 and 5. Tapis and Minas listed in Figure 4 are two typical Asian light and heavy low-sulfur crude oils. To facilitate a more accurate comparison between high-sulfur and low-sulfur crude oils, we created a sulfur-containing oil by mixing 50% Dubai crude and 50% Oman crude, and a low-sulfur oil by mixing 50% Tapis crude and 50% Minas crude. The API values of these two new high-sulfur and low-sulfur oil grades are fairly similar, as are their distillate yields; the only significant difference lies in their sulfur content. Due to the rapid growth in global demand for refined petroleum products, the refining capacity of existing refineries, which were primarily focused on processing low-sulfur oil, is no longer sufficient to meet this demand. This forces companies to expand their refining capacity, which in turn increases their need for crude oil. Meanwhile, new discoveries of low-sulfur crude oil and its production capacity seem to be on a downward trend year by year; the new crude oil production capacity comes mainly from sulfur- and acid-containing crude oils, and the rapid growth in demand for crude oil has driven up oil prices. As can be seen from Figure 4, during the rise in oil prices, the price gap between low-sulfur light and heavy crude oils shows a slight tendency to narrow. As can be seen from Figure 5, during periods of rising oil prices, the volatility in the price difference between high-sulfur and low-sulfur crude oils shows an overall upward trend, but the extent of this increase is not proportional for the two types of crude oil. Refineries should seize the opportunity to enhance their ability to respond to the crude oil market. 2.7 Refineries that already possess the capability to process sulfur-containing crude oil should also have flexibility; generally, such refineries are able to process low-sulfur crude oil as well. Since the capital investment has already been made, when comparing the economic viability of high-sulfur and low-sulfur crude oils, only the plant operating costs (i.e., cash processing fees) and differences in product composition are taken into account. To this end, the flexibility of refineries should be fully utilized in light of market changes. 3 Market-oriented approach to optimize production operations. It is an inevitable trend that China’s oil market becomes fully integrated with the international market. At present, the markets for fuel oil, asphalt, and liquefied gas are fully integrated with the international market, and there is still a certain amount of import demand each year ； The prices of refined petroleum products (gasoline, kerosene, and diesel), as well as import and export quotas, remain under **regulation ； There is still a structural imbalance between the product structure of refineries and domestic demand. With the deepening integration of global markets, a new competitive landscape has emerged. The overall strategy for domestic refineries should be to focus on the domestic market while expanding into international ones, to carry out structural adjustments as soon as possible, fully capture the domestic market, and gain a foothold in the international market. Seizing the domestic market should be our top priority. To achieve this goal, it is first necessary to abandon the approach of exploiting resources to the fullest extent; instead, we must adopt a truly market-oriented strategy, giving priority to meeting market demands and paying attention to long-term as well as short-term product structure adjustments. 3.1 Establish the concept that “there is no best crude oil, only the most cost-effective one.” The supply and demand relationship is the main factor determining crude oil prices. Due to mismatches between existing refining capacity, processing processes, and the structure of crude oil production capacity, as well as deviations in the expectations of refinery managers regarding the market, prices and values of different crude oil varieties can diverge, leading to issues related to the cost-effectiveness of crude oil. For a long time, in domestic contexts, the focus has been on determining what types of crude oil refineries are capable of processing, and then purchasing those specific types of crude oil in order to match them to the refinery’s capabilities. As a result, crude oil prices tend to be unfavorable, leading to poor economic efficiency. In contrast, Western refineries give priority to the cost-effectiveness of crude oil, focusing on what technical measures should be taken by the refineries to adapt to the processing of a particular type of crude oil in order to achieve maximum efficiency. For refineries, the most economical crude oil is undoubtedly the best one; this approach adopted by Western refineries is worth emulating and adopting. 3.2 Properly understanding the principles of “safety, stability, longevity, full capacity, and excellence” in refineries, and operating and shutting down facilities in a scientific and rational manner. In the author’s view, “safety, stability, longevity, full capacity, and excellence” represent the level of management in refineries; however, there are still strong elements of a planned economy at play. Under market economy conditions, it is necessary to pursue “safety, stability, and excellence”. The safe and stable operation of refineries is the fundamental guarantee for achieving economic and social benefits, while optimizing operations is an effective way to maximize those benefits. The market is in constant change, and as an intermediate link in the industrial chain, oil refining must be market-oriented, with the load on various processing units arranged reasonably. Decisions regarding the operation or shutdown of these units should be based on demand; pursuing \"full capacity and long operating periods\" goes against market principles. The start-up and shutdown of the facility must always be market-oriented and aimed at achieving efficiency. For example, naphtha can be converted into high-octane gasoline through reforming to produce chemical raw materials such as aromatics, and it can also supply hydrogen. If the main goal is to produce high-octane gasoline, the extent to which the price difference between gasoline and naphtha needs to be significant in order to be profitable depends mainly on the utilization of hydrogen and light naphtha. Similarly, LPG components can be converted into gasoline through alkylation or MTBE units. Whether the device can generate benefits is not fixed; the “navigation” department must constantly make predictions, conduct evaluations, and arrange for the device to be turned on or off at appropriate times. However, the pursuit is to enable the installation to operate over a \"long cycle,\" extending its operational period and reducing the need for lengthy shutdowns for maintenance; this not only saves on repair costs but also increases production capacity. Through years of effort, Dalian Xitai’s heavy oil catalytic unit has achieved a maintenance cycle of once every three years for the unit itself and once every four years for related facilities, which is at a high level in China and helps narrow the gap with refineries in the West. 3.3 Structural adjustment should first consider light processing. For a long time, given China’s lack of crude oil resources and its increasing dependence on imports, the major players in the refining industry, China National Petroleum Corporation and Sinopec, have aimed to utilize crude oil as thoroughly as possible, considering a high yield of light oils to be a sign of efficient utilization of crude oil. Therefore, the light oil yield of refineries also remains, as an indicator of technical and operational efficiency, deeply ingrained in many people’s minds to this day, ultimately leading to the loss of the fuel oil and asphalt markets to foreign companies. In recent years, this situation has changed. In fact, producing more fuel oil and asphalt can shorten the processing process; the crude oil can be heavier, resulting in relatively lower processing costs and crude oil costs. However, fuel oil prices cannot be viewed simply and in isolation; there are reasonable market laws governing them. Many refineries abroad use this process model; for example, South Korea’s SK Refinery, which is very large in scale (around 40 million tons per year), achieves a fuel oil yield of 25%. In addition to supplying the domestic market, it also exports large quantities of fuel oil. It is necessary for us to change our traditional ways of thinking, try new processing methods, select an appropriate level of processing depth, and regain our market share. 4. Aiming to enhance product value, continuously improve market quality. The market is the foundation for a company’s survival, and market quality is a key factor in determining a company’s success or failure. In the long term, China’s refined oil market still has huge demand potential, and there is a need to increase refining capacity. In the short term, supply and demand are roughly in balance, with even a slight excess of production capacity. Under such circumstances, it is necessary to focus on the present while considering the long term in order to ensure the healthy development of the refining industry. We should study the development paths of developed countries in the West, understand the changing trends in demand for refined oil products as China moves forward, and keep up with as well as guide the direction of market development. For oil refining enterprises located along the coast and in its surrounding areas, adopting a strategy of \"focusing on the domestic market while expanding into international markets\" is a long-term approach. This strategy not only helps ensure a stable supply of refined oil products and meet the needs of economic and social development, but it is also necessary for maintaining stable production operations. In other words, the international market is used as a means to adjust to changes in domestic market demand, thereby ensuring a relatively stable operating load for the refineries. 4.1 Making full use of both domestic and international markets For Chinese refining companies, the domestic market offers advantages in terms of timing, location, and support from various stakeholders. After decades of development and planning, networks for transportation, storage, and retail have been established to such an extent that foreign companies find it difficult to compete with them. What is important in the domestic market is to foster a culture of orderly competition, with the focus being on continuous improvement of services. When entering the international market, companies should leverage their respective strengths to work together effectively, knowing what to do and what not to do; orderly competition should also be established, with the focus of competition lying in competing against foreign enterprises. **Appropriate policy support should also be provided to turn these two markets into stages for Chinese refining companies to showcase their capabilities.** 4.2 Accurately grasping the pace of product quality improvement: With China’s rising environmental protection standards, the production of clean, green, and environmentally friendly fuels has become imperative, and it also serves as a key to entering high-end international markets. However, achieving this goal requires substantial financial investment, technological upgrades, and a long investment payback period. Therefore, in the process of achieving a comprehensive upgrade in product quality, it is necessary to combine refining capacity with market strategy (for example, in Southeast Asia – China’s main export target market – the improvement in the quality of refined oil lags behind that in China); plans should be made early, investments made at the right time, and actions taken in a sensible manner. 4.3 Strengthening Competitive Strategies Whether Chinese refining companies can grow stronger in the competition in both domestic and international markets depends entirely on their own competitiveness. Competitiveness stems from various factors, but since the main products of refining companies – such as gasoline, kerosene, diesel, etc. – generally have uniform standard specifications in each country or region, competitiveness mainly lies in low processing costs, and low costs constitute the key competitive strategy for these companies. As for by-products such as lubricants, paraffin, special solvents, plastics, etc., efforts should be made in terms of differentiation, technical sophistication, brand identity, and low costs to develop unique characteristics; differentiation, technology, and brand are the competitive strategies for enterprises. To gain the upper hand in competition, one must be willing to compete on par with rivals, placing particular emphasis on service; it is also necessary to build a professional service team with technical expertise and knowledge of marketing. 4.4 Implementing flexible pricing for refined products to reduce risks: For companies that primarily process imported crude oil, it generally takes 45 days from the purchase of crude oil to the release of refined products onto the market (the period for companies that process domestic crude oil is usually 15 days). This results in a mismatch between the prices of refined products and those of crude oil, and as a consequence, the company’s financial performance cannot be accurately reflected in the financial statements in a timely manner. Most of the refined oil products in our country are priced based on the Singapore Platts index, with this index reflecting the conditions in the overnight crude oil market ； On the other hand, although it is widely agreed that the PRICE method is a relatively fair and reasonable way of determining prices, there are still some shortcomings, with a risk of price manipulation or interference during the pricing period. Therefore, the pricing methods for refined oil should be diversified; for example, gasoline can be priced using the Prudhoe Bay gasoline or naphtha, as well as Dubai and Brent crude oils. Using Dubai and Brent crude oil as a basis for pricing refined products helps to address the issue of price fairness, while also locking in the price difference between refined products and crude oil, thereby enabling target-based management and achieving two goals at once. If necessary, the futures market can also be used to hedge refined oil prices. 5 Conclusion In summary, the author believes that pursuing maximum efficiency in refineries should be the philosophy that refinery managers must embrace. Managers must build on the existing process technologies of the refinery, start by analyzing the demand structure for products in target markets and keeping track of prices for crude oil and refined products. They need to completely change traditional ways of thinking and establish a goal management system centered on economic efficiency. By selecting the most cost-effective crude oil, optimizing the operation of the facilities with an emphasis on product structure improvement, and controlling various aspects such as overall costs, along with adopting flexible business strategies, it is possible to survive in a complex market environment, remain competitive, and achieve maximum benefits.