Petroleum and Chemical Industry Develops Rapidly


By Zhang Ruihe
Deputy Chief Engineer of CNCIC


   1.  Review of the economic situation in 2005


According to the analysis report prepared by China Petroleum and
Chemical Industry Association, the economic situation in the
petroleum and chemical industry of China in 2005 can be
summarized as follows: The production presented a rapid growth,
the output of major products held the leading position in the
world, the achievements in operation were remarkable and the
major economic indexes hit the best historical record. According
to statistics, the product sales revenue accomplished by the
petroleum and chemical industry of China in 2005 was RMB3 306.97
billion and the total profit was RMB371.7 billion, an increase
of 34.7% and 32.6% respectively over the previous year. The data
indicated that the petroleum and chemical industry is one of the
most rapid developed industrial sectors in China.


   2.  Period of rapid growth


It is pointed out in the Basic Concept of the Eleventh Five-year
Plan for the National Economy and Social Development formulated
by the National Development and Reform Commission that the
Eleventh Five-year Plan period (2006-2010) is the period of
rapid growth for the national economy and social development in
China. Reasons are as follow: (1) The upgrading of the
consumption distribution will create a huge demand for the
economic growth. (2) The readjustment to the industrial
distribution and the acceleration of urbanization will open up
a wider space for the economic development. (3) The increasing
trend of economic globalization will provide an opportunity for
China to participate in international cooperation and
competition.
  In various sectors of the national economy, the petroleum and
chemical industry is the sector with the most rapid growth. The
Eleventh Five-year Plan period will definitely be a period of
rapid growth for the petroleum and chemical industry. We can see
the development prospect of this entire particular industry
based on ethylene, refining and coal chemicals.


   3.  Ethylene
Major Ethylene Producers in China in 2005  (thousand tons)
Producer                                      Output
Shanghai Petrochemical Company Ltd.             962.4
Yangzi Petrochemical Company Ltd.               775.8
Beijing Yanhua Petrochemical Company Ltd.       811.8
Jilin Petrochemical Company Ltd.                511.3
Qilu Petrochemical Company Ltd.                 825.2
Daqing Petrochemical Company Ltd.               555.6
Maoming Petrochemical Company Ltd.              348.1
Dushanzi Petrochemical Company Ltd.             261.4
Tianjin Petrochemical Company Ltd.              201.4
Zhongyuan Petrochemical Company Ltd.            191.6
Fushun Petrochemical Company Ltd.               167.7
Lanzhou Petrochemical Company Ltd.              245.7
Guangzhou Petrochemical Company Ltd.            213.6
Shanghai Secco Co., Ltd.                        642.0
BASF - YPC Co., Ltd.                            341.3
Source: CNCIC Chemdata


There are 21 ethylene producers in China today. The capacity of
ethylene was 6.2 million t/a and the output was 6.266 million
tons in 2004. By the end of 2005, the capacity of ethylene in
China had reached 7.7 million t/a, and the output in 2005 was
7.5554 million tons, an increase of 20.6% over the previous year.
After the completion of the new and expanded ethylene projects
during the Eleventh Five-year Plan period, the capacity of
ethylene will have a drastic increase. It is expected that the
capacity of ethylene in China will reach 14.5 million t/a in
2010.
   With the rapid economic growth, the demand of ethylene in
China has quickly increased. The huge market demand has promoted
a fast capacity expansion. The equivalent demand of ethylene in
China was 17.3 million tons in 2004 and the output could only
meet around 36% of the demand. The equivalent demand of ethylene
reached 18.8 million tons in 2005. The average annual growth in
the equivalent demand of ethylene in the Chinese market will be
7.5% from 2005 to 2010. The equivalent demand of ethylene will
reach 27.0 million tons in 2010. Great quantities of ethylene
derivatives will still have to be imported to meet the need in
the development of the national economy.


   4.  Oil refining


The crude oil processing capacity in China had reached 321
million t/a by the end of 2004. The output of crude oil was 175
million tons in 2004, the import amount was 123 million tons,
the processing amount was 273 million tons and the import
dependence was 42.0%. The output of crude oil reached 181 million
tons in 2005, the import amount was 127 million tons and the
import dependence increased to 42.3%. The demand of crude oil
in China will be 400 million tons in 2010. Even if the output
of crude oil reaches 200 million tons, the import dependence will
be around 50% at that time.
   The feedstock for ethylene cracking in North America and the
Middle East is mainly from oil/gas fields. Due to limited
resources, the feedstock for ethylene cracking in China is
mainly from the refineries. With the rapid expansion of the
ethylene capacity and the development of the automobile industry,
CNPC, Sinopec Group and CNOOC have already started to conduct
readjustment and capacity expansion to their subordinate oil
refining enterprises to meet the increasing demand of oil
products and light oils in the domestic market.  
   Constructing ethylene units in the refineries with
integration between refining and chemical production to achieve
a coordinated development of refining and chemical production
can help enterprises improve economic performance and enhance
risk-withstanding ability. The facility distribution in the
refineries with integration between oil refining and chemical
production is also undergoing changes. The capacity of
hydrocracking and hydrofining is expanded, the yield of light
oils is increased and the ability of supplying feedstock for
ethylene units is enhanced.
  &nb