The import of crude oil from the hottest refinery

The import of local refined crude oil fell sharply, and industry integration may be inevitable

"at present, the import of local refined crude oil fell sharply, 24% lower than that in March and 41% lower than that in April." On September 27, Li Yan, an analyst of Longzhong petrochemical, revealed

according to the statistics of Longzhong petrochemical, the imported crude oil of local refining in March 2016 was about 2.73 million tons, 3.53 million tons in April and 2.08 million tons in August

the reason for the sharp decline is that in late August, the national development and Reform Commission issued the notice on further standardizing the work related to the application for the use of imported crude oil by crude oil processing enterprises (hereinafter referred to as the "notice"), which once again emphasizes the standardization of the use of imported crude oil for refining, and requires strict implementation of the application conditions, evaluation and supervision, capacity elimination/expansion and taxation

the notice is strictly worded and refers to "cracking down on tax evasion". In the long run, the upgrading of supervision may become a "pain" for the development of the refining industry

a person familiar with the matter in Shandong admitted: "the central government hopes to bring local refining enterprises into the standardized management system, but due to different ideas from the local government, the purpose is achieved by tightening the import approval policy and increasing the procurement of central oil enterprises."

according to him, on the one hand, Sinopec and PetroChina reduced their operating rates, but on the other hand, they increased the purchase of refined oil from local refining enterprises in order to make them "regular" as soon as possible

Shandong provincial government also hopes to integrate local refining enterprises, "so that these local refining enterprises can be integrated into up to 10 local refining groups." However, when draining oil, open the oil nozzle at the bottom left of the dynamometer. For various reasons, the plan has not been realized

reasons for the sharp decline

Qingdao port is the most important crude oil port in Shandong, and many super large oil tankers (ViCC) can only unload here. Before May, "10 ~ 15 ViCC tankers were waiting for unloading every day, and their crude oil imports were far greater than the port load". In may, Liu Jindao, general manager of Qingdao Shihua crude oil terminal Co., Ltd

however, Longzhong Petrochemical learned from Qingdao Customs in August that the volume of crude oil refined in situ fell sharply, down 24%, 41% and 38% compared with March, April and may

the reason for this is that the national development and Reform Commission issued the notice in August, which may become the "pain" of the development of the refining industry

for a long time, the invoicing method of products sold by local refineries has been relatively flexible. For example, gasoline will choose to issue invoices with relatively low taxes such as MTBE and aromatics to avoid some taxes

after the end of 2015, as the national development and Reform Commission gradually released the qualification of importing crude oil to local refining enterprises, a large number of local refining enterprises took advantage of the favorable opportunity of low international oil prices to import a large amount of crude oil

according to the statistics of Qingdao Customs, the import volume of crude oil in March this year alone reached 9.86 million tons, accounting for 30.24% of the national import volume at that time

however, when crude oil gradually became the main raw material for local refining, its flexible billing method became the trick for local refining enterprises to make money, but it affected the tax

more importantly, the flexible billing method has led to a huge price advantage for local refining enterprises over central oil enterprises. On August 29, Sinopec semi annual report said that as of June 30, 2016, Sinopec's oil and gas equivalent production was 218.99 million barrels of oil equivalent, a year-on-year decrease of 5.99%, and the oil and gas equivalent production in the same period last year was 232.95 million barrels of oil equivalent

therefore, Sinopec and PetroChina have written to the state one after another, asking the national development and Reform Commission to rectify the local refining enterprises

"in fact, the refining enterprises have heard the wind since June. They hope that the refining enterprises will first conduct self-examination and get the consent of the national development and Reform Commission." Shandong insiders said

therefore, since June, the crude oil import volume of local refining enterprises has decreased significantly, with 2.14 million tons of crude oil imported in June, 2.16 million tons in July and 2.08 million tons in August

"I don't think the state will kill all the local refining enterprises, but become a regular refining and chemical enterprise after rectification." The Shandong insider said

he frankly said that the refining industry has become an important pillar of Shandong, and the local government will handle it carefully

at the press conference of Shandong provincial government in April, Han kuixiang, deputy director of Shandong Local Taxation Bureau, revealed that local refining enterprises such as Shandong Jingbo Holding Co., Ltd. and Shandong Dongming Petrochemical Group Co., Ltd. had become stars in the 2015 Shandong top 100 tax payment rankings

different opinions

Li Yan agrees that "some local refining enterprises evade taxes", but he disagrees with the statement that "the crude oil import volume of local refining enterprises has fallen sharply as a result"

he believes that most of the crude oil imported from Venezuela is Malaysian Swiss crude oil, which is also an oil with a large amount of ground refining processing. In March 2016, Venezuela imported about 2.16 million tons of crude oil, which fell to about 1.93 million tons by August 2016, a decrease of 11%

"the main reason for the decline of import volume in July and August is that the international oil price was low in June, and the local refineries hoarded goods in advance, which inhibited the import in July, not caused by other factors." He said

it is understood that in June 2016, the imported crude oil of domestic local refining enterprises was about 2.14 million tons, and the imported crude oil of Venezuela was about 2.11 million tons, with little change compared with March. Therefore, "it is possible for the import volume of local refining enterprises to decline slightly, but it is impossible to plummet"

he introduced that since this year, the import volume of local refineries such as Jingbo holdings and Shandong HSBC Petrochemical Group Co., Ltd. has not been large. In June, the utilization rate of import quota of Jingbo holdings was less than 40%, mainly because the profit space of imported crude oil business of local refineries was limited (the processed refined oil was subject to consumption tax and the imported crude oil could not be deducted)

as imports do not earn money, the consumption of crude oil in domestic trade is still high

the import of refined crude oil is the allowable import volume of non-state trade, and its import volume is the reference of the previous year. Therefore, "from the current situation, the import quota of some refined crude oil will be reduced next year, and the production and operation mode of refined crude oil should not be significantly changed." He said

countermeasures

the central oil enterprises also have countermeasures for the tax evasion of the refining industry

in the first half of this year, Sinopec took the initiative to reduce oil and gas equivalent production. "On the one hand, they reduced oil and gas equivalent production, while increasing the purchase of refined oil from local refining enterprises." The Shandong insider revealed

it is understood that central oil enterprises account for a large proportion of gas stations, and after more than 10 years of operation, these gas stations have obvious advantages over private gas stations in terms of operating stores and services. Therefore, central oil enterprises account for 70% - 80% of domestic sales

"more than 50% of the refined oil of the local refining enterprises is sold by Sinopec and PetroChina, so Sinopec can force the local refining enterprises to decline significantly, and thus have to spit out part of the tax evasion." He said frankly

in this regard, local refining enterprises are also thinking of ways. Shandong Dongming Petrochemical Group Co., Ltd. has already arranged to establish and operate 1000 gas stations in six provinces including Shandong

"it is impossible for dozens of local refining enterprises in Shandong to survive together. Mergers, alliances, joint ventures and cooperation will be the main theme in the future; and each local refining enterprise will also have power to become bigger and stronger, and the market will be winner take all in the future." The Shandong insider said

on the other hand, Shandong provincial government is also thinking about the future of local refining enterprises, which means the survival of dozens of local refining enterprises and nearly one million employees. The relevant person in charge of Shandong Provincial Commission of economy and information technology has revealed that Shandong will strengthen supervision, crack down on illegal acts, and encourage the establishment of regional industry associations

two years ago, the implementation plan for the transformation and upgrading of Shandong local refining industry also proposed to support backbone enterprises to cooperate with existing private gas stations to expand the sales channels of refined oil