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Research on the Present Situation and Future Trend of China
Research on the Present Situation and Future Trend of China's Independent Refinery

Local refinery is an economic group with Chinese characteristics. Although its road of development is bumpy,  with the rapid growth of the domestic economy and oil demand, it has achieved rapid development in recent years and has become an important force in the supply of refined oil products in China.

The acquisition situation of "dual rights" and operational changes in the independent refinery.

The basic situation of the local independent refinery in China

By the end of 2015, China's total refining capacity has exceeded 700 million tons. With capacity under construction and new capacity being put into operation, the refining capacity will exceed 900 million tons in the next few years, far exceeding the domestic demand. Competition in China's oil refining industry has gradually intensified.

China's independent refinery processing capacity is close to 200 million tons, accounting for one-fourth of the total national refining capacity of 730 million tons, among which, Shandong independent refinery shares the capacity of 140 million tons, accounting for 19.6% of the national refining capacity. What's more, its secondary processing capacity is relatively better.

The usage of imported crude oil and the acquisition situation of import rights in  independent refinery

Up to now, a total of 21 local independent refineries have received a quota of 79.83 million tons of imported crude oil. Imports of non-state trade are 55.73 million tons.

Winners of 55.73 million tons' import consumption are respectively Lijin Petrochemical Factory Co. Ltd., Kenli Petrochemical Group Co. Ltd., Dongming Petrochemical Group Co. Ltd., Panjin northern asphalt fuel Co. Ltd., Ningxia pagoda Petrochemical Group Co. Ltd.,  Dongying Yatong Petrochemical Co. Ltd., Shandong Huifeng Petrochemical Group Co. Ltd., Shandong Tianhong Chemical Co. Ltd., Shouguang Lu Qing, Jingbo petrochemical, qirun Petrochemical Factory Co. Ltd. and Haiyou petrochemical, Qingyuan petrochemical, Wudi Xin Yue petrochemical. Recently, there are six local independent refineries are applying for the use of crude oil, they are respectively, Rizhao Bridge Port Petrochemical, Henan Fengli petrochemical, Shandong Wantong petrochemical, Shandong Hai Ke Chemical and Shandong Xintai Petrochemical Company, Jiangsu xinhai Petrochemical. The total amount of imported crude oil used by the above local refineries is about 15 million tons.

A total of about 30 independent oil refineries with the cumulative capacity of 114 million tons, have been or are applying for the right to import crude oil and import rights. The quota of imported crude oil altogether is expected to reach 100 million tons, close to 1/3 of the existing Chinese crude oil imports. The increase in demand for crude oil from local independent refineries in China will be one of the few bright spots in the current sluggish international oil markets.

The impact on obtaining dual rights of the independent refinery- operating rate

Since dongming petrochemical first obtained the import and use right of crude oil, China's local oil refining enterprises have made great improvements from the construction rate, the enterprise efficiency, the product structure and the sales structure.

Having obtained sufficient raw materials, the opening rate of local independent refineries has improved significantly. Among them, the independent refineries with qualification in shandong province have reached 73.8 percent from January to September in 2016 with a 35% increase from the previous year. The total processing volume was 65 million tons, improved by 55%, and the production of gasoline and diesel increased by 14% and 23% respectively.

Increased ownership of refined oil sales-product flow

In December 2015, dongming petrochemical obtained the qualification of processing and re-export of incoming materials, thus achieving a breakthrough in the domestic independent refinery oil exports. In 2016, the export quantity of refined oil from local independent refinery relatively grow slowly because of the restriction from ports and logistics and unsustainable export policies. But as an incremental impact on the international refined oil market, it has become a force that can not be ignored in the international market

Economic performance- good efficiency , increasing economic proportion

The operation of local independent refining enterprises has improved greatly since 2015. Taking Shandong, the province with the most concentrated independent refineries , as an example, in the first three quarters of 2016, Shandong refining enterprises processed various raw materials of about 65 million tons, with an expected annual processing capacity of 90 million tons. In addition, the processing volume, main business income, profits and taxes, and production capacity and profit margin have all increased substantially. Profits and taxes increased by 177% in qualified enterprises, higher than the growth rate of 55% of enterprises without qualifications.

From January to September this year, the province's refining industries have achieved the main business income of 362.5 billion yuan with a year-on-year growth of 18.5%, 6.6% higher than the first half of the year; And they have achieved profits and taxes of 23.1 billion yuan with the profit of 9.8 billion yuan, respectively increased by 119%, 76%. The main business revenue is expected to be 500 billion yuan, accounting for 10% of the province's 5 trillion GDP. with an increase in economic share, it will account for 30% of GDP growth.

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