Thread Content
21st Century Business Herald (He Qing) On December 26, industry insiders revealed that the private enterprise Shenghong Petrochemical Group Co., Ltd. will build China’s largest single-unit vacuum distillation unit with a capacity of 16 million tons. Currently, only CNOOC’s Huizhou plant and Sinochem’s Quanzhou plant have single-unit capacities of 12 million tons per year; in Asia, this capacity is slightly lower than that of South Korea’s GS Caltex Yeosu refinery, which has a vacuum distillation unit with a capacity of 16.5 million tons per year. This will also be the largest oil refining and petrochemical integration project currently under construction by a private enterprise in China. “This project is located in Lianyungang, Jiangsu, with a total investment of around 75 billion yuan. Once completed, it is expected to generate annual sales revenue of over 120 billion yuan and annual tax revenues of over 20 billion yuan. ”He said. However, Li Li, director of energy research at Anxunsix, said, “Within as little as 5 years, this record could once again be broken by the Zhejiang petrochemical project planned by Rongsheng (with a production capacity of 20 million tons per year for refining, 5.2 million tons of aromatics, and 1.4 million tons of ethylene in its second phase).” ” On December 16, Sinopec’s Maozhan refining and chemical complex announced the start of construction, but the scale of the project was reduced from the original 15 million tons per year to 10 million tons per year. With overcapacity in the industry, why do private enterprises still launch large-scale petrochemical projects? Li Li admitted that for private enterprises such as Shenghong Petrochemical and Zhejiang Petrochemical, the main reason for entering the refining and chemical industry on a large scale is to obtain chemical products needed to survive in China’s chemical industry; some of the refined oil produced can also be sold through exports. Focusing on the chemical industry, Shenghong Petrochemical is a wholly-owned subsidiary of Shenghong Holding Group Co., Ltd., and was established in 2010 in Xuwei New Area, Lianyungang City. Its subsidiaries include companies such as Jiangsu Sierbang Petrochemical and Jiangsu Honggang Petrochemical. Zheng Guodong, general manager of Shenghong Petrochemical, said that over 20 billion yuan has been invested to date, enabling the construction of a PTA production facility with an annual capacity of 1.5 million tons, a liquid chemical storage facility with a capacity of nearly 1 million cubic meters, a liquid chemical terminal with 3 berths, and a cogeneration plant. Some units of the 3.6 million tons/year alcohol-based cogeneration project have been built and are in trial production. Next, the Shenghong Petrochemical project will be designed following an integrated processing model for refining, aromatics, and ethylene, adopting a total process flow that includes crude oil processing + heavy oil hydrocracking + p-xylene + ethylene cracking + IGCC. Shenghong Petrochemical adopts a strategy focused on larger-scale facilities; its atmospheric and vacuum distillation units are designed with a capacity of 16 million tons per year. It utilizes large-scale hydrogenation processes, with a total hydrogenation capacity of 19.2 million tons per year, which represents 120% of the 16 million tons of crude oil processed annually. “Approval is planned to be obtained and construction to begin by the end of 2016, with completion and operation starting in 2019. ”Zheng Guodong said. Previously, two private enterprises, Zhejiang Rongsheng Holding and Tongkun Group, joined forces with Juhua Group, a local state-owned enterprise in Zhejiang, to invest in a large-scale petrochemical project in Zhoushan named Zhejiang Petrochemical. The first phase of this project is expected to come online by the end of 2018. Rongsheng Holdings is one of the earlier domestic companies to enter the field of direct polyester spinning, with petrochemical enterprises located in Ningbo, Dalian, Hainan, and other places. Dalian Yisheng is in charge of the local PTA production project with an annual capacity of 1.2 million tons. However, due to the lack of upstream refining capacity, Rongsheng Holdings lacks confidence in further expanding downstream chemical production capacities such as those for PTA. In November 2014, after Rongsheng Holdings publicly proposed the construction of the Zhoushan large-scale petrochemical project, it received strong support, with approval granted at every stage by local authorities as well as relevant ministries and departments. “At present, Phase 1 of this project has been constructed on Dayushan Island in Zhoushan. ”It was introduced by a *** member from Zhejiang Province. Similarly, Shenghong Petrochemical is also focused on the chemical industry; they aim to use their refining projects to drive development in various other industries such as petrochemicals and textiles. As for the production of refined oil products, this can be addressed through exports. ”Li Li said. Potential influence: During the ** period in 2016, Zhou Guohui, a deputy to the National People’s Congress and head of the Zhejiang Provincial Department of Science and Technology, submitted a proposal titled \"Suggestions on Accelerating the Establishment of a Free Trade Zone in China (Zhoushan, Zhejiang)\». The proposal suggested that the Zhoushan Free Trade Zone could develop into a hub that integrates oil storage, processing, trading, supply, and supporting services, thereby becoming the world’s largest oil storage and transportation center, an international green petrochemical hub, an international oil product trading center, a bonded fuel supply market for Northeast Asia, and an international maritime services center – all of which would enhance China’s institutional influence in global economic governance. Zhou Guohui called for accelerating the liberalization of storage, transportation, and transit of oil products, opening up access to the oil investment market, establishing a Zhoushan International Oil Products Exchange, exploring the possibility of oil product futures trading, and using the RMB for pricing and settlement. The suggestion is to use refining projects such as Zhejiang Petrochemical to help the Zhoushan International Oil Products Exchange become a leader in the Far East market. In June, the **National Development and Reform Commission issued the \"Development Plan for the Yangtze River Delta Urban Agglomeration.\" It stipulated that, relying on the Ningbo-Zhoushan Port, efforts should be made to establish an international-class integrated port for river-sea transportation, a shipping services hub, and a base for the storage, processing, and trading of bulk commodities, thereby creating a demonstration area for the integrated development and reform of ports in China. ” Behind this approval is the increasing export of refined oil products. In November 2016, China’s exports of refined petroleum products (gasoline, kerosene, diesel, other fuel oils, and naphtha) amounted to 4.85 million tons; the cumulative exports of such products from January to November were 42.96 million tons. This means that in the future, China will export 50 million tons of refined oil per year. **Data from the National Development and Reform Commission in July showed that China’s consumption of refined oil in the first half of this year was 159.1 million tons. “Petroleum companies in Japan, South Korea, and other countries also drive the development of their chemical industries through the export of refined oil products; therefore, China’s plan to export refined oil products may not be unsuccessful, but it is necessary to be vigilant against foreign trade protection measures. ”An expert from a state-owned oil company said.