EVOLUTION OF CHINESE INDEPENDENT REFINERIES

Transcription

1 EVOLUTION OF CHINESE INDEPENDENT REFINERIES James Gao Industry Analyst SCI International Business Unit

2 Excellence Creates Miracle SCI Branches Shanghai Missouri Shandong Xiamen 1

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4 Excellence Creates Miracle SERVICE SYSTEM 3

5 4

6 History and Current Situation of Shandong Independent Refineries Birth & Breaking Through Tough Reform & Rise From Disordered to Well- Organized 2015 Present Import & Export Policies 21 13,124,760 bbl/a PetroChina, 27% 2016 Chinese Oil Refining Capacity Structure CNOOC, 5% ChemChina, 3% Sinopec, 37% Others, 25% Sinochem Quanzhou Petrochemical, 2% China North Industries Group, 1% Shandong Independent Refineries, 17% Other Independe nt Refineries, 8% bbl/day 3,040,000 2,540,000 2,040,000 1,540,000 1,040, , Shandong Independent Refineries Capacity 2,736,477 2,265,189 40,

7 History and Current Situation of Shandong Independent Refineries Independent Refineries Refined Oil Products Output Shandong Independent Refineries Gasoline and Diesel Output Gasoline and Diesel Output Comparison between Shandong Independent Refineries and Chinese Refineries million bbl Shandong independent refineries gasoline and diesel output is increasing. The output reached million barrels in 2016, covering 19.38% of China s gasoline and diesel output Gasoline Diesel 302 million bbl 3,000 2,500 2,000 1,500 1, Shandong independent refineries' output Chinese output Shandong independent refineries' proportion 19.38% 20% 18% 16% 14% 12% 10% 6

8 Content 1 Previous Issues Insufficient Crude Oil & Product Quality Upgrade Content 2 3 Current Situation Three Rights Obtainment & Status Promotion Current Issues Challenges & Opportunities 4 Chinese Independent Refineries Future New Start of Independent Refineries 7

9 1 PART ONE Chinese Independent Refineries Previous Issues Insufficient Crude Oil & Product Quality Upgrade 8

10 Chinese Independent Refineries Previous Issues Insufficient crude could be refined was the biggest bottleneck, and the consumption tax worsened the fuel oil refining Shandong Independent Refineries Feedstock Structure Chinese Consumption Tax of Oil Products RMB/L Gasoline Diesel Fuel oil $35/bbl Crude oil 43% 2009 Fuel oil % /9 2006/4 2008/1 2009/1 2014/ / /1 9

11 Chinese Independent Refineries Previous Issues The upgrade of Chinese gasoline and diesel national standards made the refining difficulty double for inferior feedstock. S content comparison Sulphur content limit 1.54% 1.52% 1.5% GB III 0.6% GB IV GB V Merey crude oil Shengli oil M100 ESPO 10

12 Chinese Independent Refineries Previous Issues Loan Difficulty Tax Pressure Environmental Protection Pressure Low Brand Recognition Product Homogeneity 11

13 Chinese Independent Refineries Previous Issues Suppressed by feedstock and policies, independent refineries were sold and eliminated. Acquisition Crude oil & Policy oppression Exchange Elimination 12

14 Content 1 Previous Issues Insufficient Crude Oil & Product Quality Upgrade Content 2 3 Current Situation Three Rights Obtainment & Status Promotion Current Issues Challenges & Opportunities 4 Chinese Independent Refineries Future New Start of Independent Refineries 13

15 2 PART TWO Chinese Independent Refineries Current Situation Three Rights Obtainment & Status Promotion 14

16 Chinese Independent Refineries Current Situation Crude oil policy loosening is in favor with the general public and also a transformation of state attitude Crude Oil Proportion in Shandong Independent Refineries Raw Materials 2015 Raw Material Structure of Shandong Independent Refineries Crude oil 77.18% 77% 70% 62% 58% 53% Fuel Oil Others 22.82% Bitumen mixture 15

17 Chinese Independent Refineries Current Situation Independent refineries operating rate increased greatly, backed by the sufficient supply of crude oil. 70% 60% Shandong Independent Refineries' Operating Rate 64.40% 50% 40% 30% 26.04% 20% Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 16

18 Chinese Independent Refineries Current Situation Independent refineries are becoming more and more competitive, through capacity expansion. bbl/day 1,600,000 1,400,000 1,200,000 1,000, , , , , Shandong Independent Refineries Crude Oil Processing Volume 1,455, , Top 10 Shandong Independent Refineries Unit: bbl/day Ranking Region Refinery Capacity 1 Weifang Changyi Petrochemical 160, Heze Dongming Petrochemical 150, Dongying Huaxing Petrochemical 140, Dongying Hualian Petrochemical 124, Zibo Huifeng Petrochemical 116, Dongying Wantong Petrochemical 116, Weifang Hongrun Petrochemical 114, Dezhou Hengyuan Petrochemical 110, Dongying Tianhong Chemical 100, Binzhou China Offshore Bitumen (Binzhou) 100,

19 Chinese Independent Refineries Current Situation Main types of imported crude oil that independent refineries are processing Others, 36% Duri, 12% Oman, 32% ESPO, 20% Imported Crude Oil Types Refinery Dongming Petrochemical Lijin Petrochemical Kenli Petrochemical Yatong Petrochemical Hongrun Petrochemical Huifeng Petrochemical Tianhong Chemical Chambroad Petrochemicals Luqing Petrochemical Qirun Chemical Haiyou Petrochemical Hengyuan Petrochemical Qingyuan Petrochemical Shenchi Chemical Crude Type Oman, Mandji, Merey Oman, Cinta, offshore oil, Shengli oil ESPO, Cinta, offshore oil, Shengli oil Oman, Duri, Urals, offshore oil, Shengli oil ESPO, Kuwait Oman, Escolante, Vasconia Oman, Cinta, Songkhla, offshore oil, Shengli oil Arabian Heavy ESPO, Oman Oman, Escolante, Mezcla, Sadun, Escolante West African oil, offshore oil offshore oil, Djeno offshore oil, Shengli oil 18

20 Chinese Independent Refineries Current Situation Crude oil demand is increasing, and more independent refineries are applying for quotas. Unit: bbl Refinery st Batch 2016 Dongming Petrochemical 48,092,400 54,900,000 Panjin North Asphalt 41,504,400 51,240,000 Hongrun Petrochemical 37,258,800 38,796,000 Lijin Petrochemical 22,838,400 25,620,000 Kenli Petrochemical 16,396,800 18,446,400 Baota Petrochemical 3,367,200 45,091,200 Yatong Petrochemical 14,713,200 20,203,200 Huifeng Petrochemical 12,224,400 30,451,200 Luqing Petrochemical 15,957,600 18,885,600 Tianhong Chemical 27,450,000 32,208,000 Chambroad Petrochemicals 5,709,600 24,229,200 Qirun Chemical 15,225,600 16,104,000 Haiyou Petrochemical 3,147,600 23,424,000 Hengyuan Petrochemical 12,810,000 25,620,000 Wudi Xinyue Chemical 8,784,000 17,568,000 Qingyuan Petrochemical 14,786,400 29,572,800 Shenchi Chemical 9,223,200 18,446,400 Jincheng Petrochemical 10,980,000 21,960,000 Xinhai Chemical 13,615,200 27,230,400 Total 334,084, ,996,

21 Chinese Independent Refineries Current Situation Refined oil products export is a new beginning. The export volume will increase, but the increase will be limited Chinese Gasoline and Diesel Export Volume million bbl Chinese Gasoline and Diesel Apparent Consumption Volume million bbl 1,400 1,200 1, ,255 1,019 Gasoline Diesel Gasoline Diesel 20

22 Chinese Independent Refineries Current Situation Sufficient Crude Oil Operating Rates Increasing Industrial Position Improving Capacity Expanding 21

23 Content 1 Previous Issues Insufficient Crude Oil & Product Quality Upgrade Content 2 3 Current Situation Three Rights Obtainment & Status Promotion Current Issues Challenges & Opportunities 4 Chinese Independent Refineries Future New Start of Independent Refineries 22

24 3 PART THREE Chinese Independent Refineries Current Issues Challenges & Opportunities 23

25 Chinese Independent Refineries Current Issues Despite the benefit of crude oil policy, independent refineries still face problems. Production Infrastructure Procurement Marketing Will new crude oil be suitable for independent refineries units? How can the crude oil be imported, curbed by low transportation capability? How will independent refineries reduce risks, with no crude oil import experience? How will independent refineries sell their products, considering severe oversupply? 24

26 Chinese Independent Refineries Current Issues Simplify the crude oil purchasing process, and try to raise their international position. How to purchase the crude oil S! S Disordered bidding procurement Lack of bargain power Loan difficulty High transportation cost China Petroleum Procurement Federation of Independent Refineries 7 applying refineries 5 refineries with imported crude oil use right and imported crude oil qualification 7 refineries with imported crude oil use right 25

27 Chinese Independent Refineries Current Issues Build more pipelines to reduce transportation costs. Laizhou Port 莱州港 Yanzi Line (453km) Ridong Line (446km) Huangwei Line (190km) Laichang Line (110km) 26

28 Chinese Independent Refineries Current Issues The raw material change leads to a rising tax expense, so the fuel oil will still exist in the short term. Fuel oil Crude oil purchase 1,218 RMB/mt USD/bbl purchase 0 sale Gasoline and diesel consumption tax 2,110 / 1,411 RMB/mt 36.03/26.88 USD/bbl 27

29 Chinese Independent Refineries Current Issues Raise sales volumes of gasoline and diesel. Cooperate with stateowned enterprises Increase purchase volumes 2015 Shandong Gas Stations Layout CNOOC 0.47% SHELL 0.78% Compete with stateowned enterprises Build more gas stations Cooperative marketing PetroChina 8.71% Sinopec 22.93% Others 67.12% Private 63.39% Appropriate export Shandong Independent Refineries 3.73% 28

30 Chinese Independent Refineries Current Issues Increase the plant competitiveness. Newly-added refining units of Shandong independent refineries Delayed coking 5% Follow-up unit update RFCC 8% Reformer 12% Atmospheric and vacuum 28% Hydrogenation 47% Enhance units competitiveness Units need to adapt to the feedstock structure change Hydrogenation technology Units energy consumption reduction 29

31 Chinese Independent Refineries Current Issues The floor price protects refineries profit. Shandong Independent Refineries Oil Refining Profit RMB/mt Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 40/bbl 30

32 Chinese Independent Refineries Current Issues Strengthen international cooperation, and lengthen industrial chains. November 2015 Dongming petrochemical signed a Lihuayi Group signed agreements on Chambroad established a trading company in Challenges long-term crude oil supply agreement crude oil import & with Opportunities BP, Dutch Shell, overseas with a main business of importing with BP ; Switzerland Vitol,etc. crude oil. The imported crude oil usage volume The imported crude oil usage volume The imported crude oil usage volume for for Dongming Petrochemical is 7,500 for Lijin Petrochemical is 3,500 kt/a. Chambroad is 3,310 kt/a. kt/a. 采购 Production 运输 Infrastructure 2015 Russia's Rosneft provided 10,000kt of light crude oil for ChemChina. The crude oil import quota of ChemChina is 10,000 Marketing kt/a. Procurement January 2016 Hengyuan Petrochemical acquired the Malaysian-Based Shell Refining Company. The application of 3,720 kt/a imported crude oil use right from Hengyuan Petrochemical is waiting for approval The floor price makes the crude oil refining come into practice. 国际合作加强 Tianhong Chemical signed a strategic agreement with BP on crude oil import; The imported crude oil usage volume for Tianhong chemical is 4,400 kt/a. The independent refineries without crude oil non-state import trade qualification are also active to explore the overseas market International cooperation is strengthening. 31

33 Content 1 Previous Issues Insufficient Crude Oil & Product Quality Upgrade Content 2 3 Current Situation Three Rights Obtainment & Status Promotion Current Issues Challenges & Opportunities 4 Chinese Independent Refineries Future New Start of Independent Refineries 32

34 4 PART FOUR Chinese Independent Refineries Future New Start of Independent Refineries 33

35 Chinese Independent Refineries Future The industrial position of Shandong independent refineries is promoted. The demand for crude oil will be rising in the short term. National policy support Chinese Crude Oil Apparent Consumption bbl/day Volume 14,150,000 2 Break state-owned refineries monopoly 12,150,000 10,150,000 Transformation & upgrading 3 8,150,000 6,150,000 4 Activate the refining industry 4,150,000 2,150, ,

36 Chinese Independent Refineries Future Crude oil will be the only raw material, and Shandong independent refineries will start a new round of reshuffle. Mature stage of Shandong independent refineries 山东地炼发展成熟之时, 必能与中字头企业分庭抗礼 Raw material Crude oil >99% Serious homogenization & intense internal competition Profit = Survival Capital cost Unit cost Operating cost Labor cost Future position = Survival Brand Integration 35

37 Chinese Independent Refineries Future National policy orientation Independent refineries are a major force to promote the development of China's oil refining industry, and three rights delegation is only a new start for independent refineries. The Chinese government hopes to build a large-scale and diversified development pattern in Chinese oil refining industry. The marketization of China's oil refining industry has never stopped, which is the foundation for the healthy development of China s refining industry. Shandong independent refineries are of great significance for China s refining industry. Due to the tough energy security situation, the future Chinese policies will proceed from this aspect. 36

38 Analyst Team Excellence Creates Miracle DATA COLLECTION 37

39 Excellence Creates Miracle SERVICE SYSTEM Data Report Value Added Service Supply Capacity, Output, Import, Stock, Operating rate, Storage capacity, Refinery data, etc. Demand Export, Apparent consumption volume, etc. Regular Report Weekly/Monthly/Annual report, Data analysis report Multi-client Report China s Independent Refineries Business Report Event and training Consulting Advertisement On-the-spot investigation 38

40 CONTENTS China s Independent Refineries Operation Report Contents Part China s Independent Refineries Development History Part 2 China s Independent Refineries Refining Process Analysis Part 3 China s Independent Refineries Product Circulation Analysis Part 4 China s State-Owned Integrated Refineries & Independent Refineries Oil Processing Section Key Part 5 China s Independent Refineries Development Outlook 39

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