(Dong Xiucheng) Since the cancellation of refined oil export rights for private refining and chemical companies in 2017, Zhejiang Petrochemical was the first to obtain refined oil export rights
Standards are the basic conditions for private enterprises to export refined oil products (Hot Spot Interpretation)
(Source: "China Energy News" 2020-07-20 Page 13)
A few days ago, the Ministry of Commerce issued the "Reply on Agreeing to Grant Zhejiang Petrochemical Co., Ltd. the Qualification for Non-State w88 Export of Refined Oil" (Business Letter [2020] No. 205). Zhejiang Petrochemical Co., Ltd. (hereinafter referred to as "Zhejiang Petrochemical") became the first private enterprise besides the five major central enterprises to obtain the right to export refined oil. Zhejiang Petrochemical is also the first private refining and chemical company to obtain refined oil export permission since the Ministry of Commerce canceled the refined oil export quotas for private refining and chemical companies in 2017.
In the view of industry insiders, under the current background of oversupply and increasingly fierce competition in my country's refined oil market, it is of great significance to once again liberalize export quotas for refined oil products to private enterprises.
It was expected that Zhejiang Petrochemical would set a precedent
The Ministry of Commerce pointed out in the approval document that it agreed to grant Zhejiang Petrochemical the qualification to export refined oil products as a non-state w88, and proposed that Zhejiang Petrochemical's refined oil export w88 should be subject to national macro-control and regulatory management, and it should jointly undertake tasks such as ensuring national energy security and stabilizing domestic market supply with other refined oil export companies, and report the implementation status to the Ministry of Commerce in a timely manner.
Information shows that Zhejiang Petrochemical is jointly invested and established by Rongsheng Petrochemical, Zhejiang Tongkun, Zhejiang Juhua and Zhoushan Ocean Investment, and is controlled by Rongsheng Petrochemical. The company has a registered capital of 50.8 billion yuan, and has 40 million tons/year integrated refining and chemical projects, with a total investment of 173 billion yuan. At the end of 2019, the first phase of the Zhejiang Petrochemical Refining and Chemical Integration Project was fully put into operation, with a scale of 20 million tons/year of oil refining, 1.4 million tons/year of ethylene and downstream chemical equipment.
“Receiving the approval of the non-state w88 export qualification of refined oil products this time will help the company further explore the international market, fully mobilize the enthusiasm of both domestic and international markets, accelerate the improvement of brand influence and competitiveness, pursue maximization of benefits, and have a positive impact on daily operations.” Rongsheng Petrochemical said.
Many industry insiders said that this time Zhejiang Petrochemical had priority in obtaining the non-state w88 export qualification of refined oil products, which was expected.
"Zhejiang Petrochemical's 40 million tons/year large-scale refining and chemical project is approved by the state. If it gives crude oil import quotas, it will naturally also approve refined oil export quotas. This is a consideration; on the other hand, it is located in the Zhejiang Free w88 Zone, which is an area currently being vigorously developed by the country, and Zhejiang Province is developing refining and chemical industry as a big industry." said Dong Xiucheng, director of the "Belt and Road" Energy w88 and Development Research Center at the w88 casino.
Wang Lining, director engineer of the Petroleum Market Department of the China National Petroleum Economic and Technology Research Institute, also told reporters: "Zhejiang Petrochemical represents the country's advanced refining capabilities and has a stronger advantage in participating in international market competition. In addition, choosing Zhejiang Petrochemical to conduct trials first will also be conducive to wider and larger-scale policy promotion in the future."
The inevitable choice for surplus refined oil
In the current context of my country's increasingly overcapacity refining capacity, as large-scale refining and chemical integration projects such as Hengli Petrochemical and Zhejiang Petrochemical have been put into operation in 2019, competition in the domestic refined oil market has become more intense.
The "2020 China Energy and Chemical Industry Development Report" released by the Sinopec Economic and Technological Research Institute shows that my country's refined oil terminal consumption growth slowed to 2.8% in 2019, and the growth rate is expected to further decrease to 2.2% in 2020. The export volume of refined oil will continue to increase, and may become the largest exporter of refined oil in the Asia-Pacific region.
In Wang Lining's view, private refining and chemical companies' participation in refined oil exports is an inevitable choice for the current surplus in the refined oil market. "Under the background of oversupply of refined oil products in my country, refining capacity will continue to increase in the future, while demand growth for refined oil products is slowing down. Private refining and chemical companies have the need to export. This is an inevitable trend under the background of a large industry."
Dong Xiucheng also said: "In general, it is because of the surplus of domestic refined oil products and fierce market competition. Allocating part of the quota for export can alleviate the pressure on the domestic market."
"There is currently an oversupply of domestic refined oil products, and many refinery units are not operating at full capacity because they are worried that after full load, there will be too much supply in the market, further suppressing prices. If you have export authority, you can choose to maximize the processing load. This will not only increase the output of gasoline and diesel, but also increase the output of chemical products. It will increase accordingly, which can make up for the shortage of some domestic chemical raw materials. "Ding Xu, an analyst at Longzhong Information, told reporters, "In addition, judging from the current situation, with the increasing domestic supply, the domestic market price has obviously been weaker than the international market price in the past two years. In this case, the profit opportunities for export are greater."
Can be released to qualified enterprises in due course
In fact, it is not unprecedented to liberalize the export rights of refined oil products to private enterprises.
As early as the end of 2015, Dongming Petrochemical was approved for a gasoline export quota of 10,000 tons, breaking the situation where state-owned enterprises monopolized export quotas. In 2016, 12 local refineries in Shandong received a total of 1.675 million tons of refined oil export quotas, but the actual completed volume was less than 1 million tons. Since 2017, there have been no private companies included in the Ministry of Commerce’s refined oil export quotas.
In December 2019, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Creating a Better Development Environment to Support the Reform and Development of Private Enterprises", stating that qualified private enterprises should be supported to participate in the import of crude oil and the export of refined oil products. This provides policy guidance for private companies to once again obtain the right to export refined oil products.
However, in the opinion of many interviewees, the export of refined oil products will not be fully liberalized.
"I personally think it is unlikely to fully liberalize the export of refined oil products." Dong Xiucheng told reporters bluntly, "The oil refining industry is actually a high-consumption industry. From the perspective of the entire industrial layout, the country hopes to optimize the industrial structure and eliminate backward We do not want to turn it into a "two ends out, big import and export" industry, that is, large-scale import of crude oil and large-scale export of refined oil. This is also contrary to our orientation of addressing climate change, energy conservation and emission reduction. Therefore, the state basically strictly controls the export of refined oil."
"The state gives quotas to several major state-owned oil companies, which relatively guarantees the execution of the quotas and facilitates supervision. In the past, export quotas were given to private enterprises, but they were canceled because they were not implemented. However, it is not ruled out that export quotas will be increased moderately, and some larger private enterprises that are easy to supervise may be selected to give quotas." Dong Xiucheng further pointed out.
In Wang Lining’s view: “For companies that can export refined oil products, first of all, their market operations must be standardized. This is a basic condition. Another thing that needs to be considered is whether the company has sufficient international competitiveness. Therefore, from a market perspective, the market itself also has an elimination mechanism, which will limit the disorderly expansion of production capacity to a certain extent and retain the best companies to participate in the competition.”
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