Petroleum and Chemical Sector Manages Quake-hit Loss   

By Lily Wang   

Sichuan province's GDP only accounted for approximately 3.2% of the national total in 2007. It seems the massive earthquakes in Wenchuan of Sichuan province do not affect China's economy, moreover, the quake-hit regions are located the areas with more poverty and mountains. However, the quake disaster in Sichuan happened at the time when China is making efforts to build a harmonious society and China will soon hold the Beijing 2008 Olympics. Therefore, the quake's negative impact on China's economy is expected to become larger. People in China including senior officials, citizens, children and foreign friends all act swiftly and contribute to relief the quake-hit areas.
     Concerning petroleum and chemical sector, destroys on China's petroleum and chemical sector by Wenchuan quake are much heavier than that of Tangshan (Hebei province) quake in 1976, which caused a death of more than 300 000. According to chemical insiders, China Chemical Industry Yearbook recorded briefly, "On July 28th, 1976, an earthquake happened in Tangshan of Hebei province, Tianjin Soda Plant suffered heavy destroy and had to discontinue its operation. The plant resumed production on September 10th, 1976 through 45 days of repairing. Pharmaceutical producers operated their production day and night to meet the demand for medicines in the quake-hit region."
    Now, Sichuan petroleum and chemical sector occupies a strong position in China's petroleum and chemical market thanks to its outstanding peculiarity. Sichuan takes 20% gas reserves of the national total and is a start of West-East Gas Pipeline. The province is also a significant urea supplier in China, with a 7% share of the national urea output in 2007. Sichuan Chemical Company Limited, a large urea producer in Sichuan, expects to discontinue its urea operation in Chengdu site for 40 days. An additional leading urea producer in Sichuan, Sichuan Meifeng Chemical Industry Co., Ltd. has to discontinue its production in Deyang and Mianyang sites after two days of the quake. Sichuan Hongda Chemical Company Ltd. (SH: 600331), a domestic leading zinc producer and phosphate fertilizer firm, has stopped production since the disaster happened. All firms in Sichuan have to manage the negative impacts by the accident.
    According to China National Fertilizer Industry Association, the Sichuan quake will affect heavily production of urea and phosphate fertilizers and tighten the supply of fertilizers in Chinese market as well as drive the domestic fertilizer prices to rise further.  
    "728 PetroChina gas stations were partly damaged by the earthquakes, and 78 of them stopped operation," said Jiang Jiemin, President of PetroChina Company Ltd.
    "Out of 76 PetroChina drilling rigs in the quake region, only 16 are still in operation."
    Facing the Wenchuan quake, all petroleum and chemical companies strengthen presence in their commitments and donations as well as businesses.
    PetroChina, the listed subsidiary of CNPC, has full ability to ensure oil supply in the quake region, despite transportation difficulties and growing demand by the earthquake.
    CNPC donated RMB10 million to quake-hit areas.
   Sinopec Group, the nation's largest oil refiner, has offered 63 500 tons of emergency fuel to quake-hit Sichuan province and nearby Chongqing. By May 19th, Sinopec Group and its employees has donated RMB80 million to the quake-hit areas, according to its website.
   China National Offshore Oil Corp (CNOOC), the country's largest offshore oil producer, plans to donate RMB500 million over five years for post-quake reconstruction.
   Formosa Plastics Group donated RMB100 million to the quake-hit areas. LCY Chemical Industry Corporation donated US$10 million to Wenchuan.
   Chevron China, the business partner of CNPC's Southwest Oil and Gas Field Company on the Chuandongbei Project, donated US$1.4 million to the Red Cross of Sichuan Province in the hope of helping quake victims.
    The Dow Chemical Company donated RMB7.45 million to support relief efforts and school reconstruction in China's earthquake stricken areas.
    BP China donated US$10.5 million to quake-hit areas.
    BASF, DuPont China, Bayer Group, Shell, Total, PPG, Wacker, Rohm and Haas, CSI, Celanese, XinAo Group ... , as leaders of petroleum and chemical or new energy sectors worldwide, they are all committed to making people's daily lives better, especially eyeing the Wenchuan quake.
    China's petroleum and chemical sector has confidences to ensure supply of fuels and chemicals in Chinese market, resume operations as soon as possible and draw up post-quake reconstruction of petroleum and chemical producers in the quake-hit areas.