PetroChina Has Magic in Refining & Chemical Operations


With repeated blows from the crude oil price rise, the refining
sector in China has suffered an overall loss in 2005. The
mid-term performance statement of PetroChina Company Ltd. shows
that the loss in its oil refining operation was RMB5.95 billion
in the first half of 2005, a sharp contrast to a profit of RMB8.98
billion gained in the same period of 2004.


Magic in oil refining operation


It is however obvious that a temporary hard time can in no way
drag the advance pace of the refining operation in PetroChina,
let alone affecting the confidence in PetroChina in the stock
market because such confidence comes from the satisfactory
performance achieved by the refining operation of PetroChina
since its listing in the stock market.
   The general manager of PetroChina Refining and Sales Co., Ltd.
points out that “in the past 5 years the oil refining operation
of PetroChina has relied on technical progress, adjusted the
distribution of refining operations, optimized the structure of
oil refining units, conducted energy conservation and
consumption reduction, strengthened technical management and
achieved considerable upgrading in competitive edge,
profit-earning ability and risk-withstanding ability.”
   PetroChina has conducted a series of readjustments to the
structure of refining operations since 2000. It has made an
investment of RMB9.7 billion and constructed three 10 million
t/a refining bases in Dalian Petrochemical Company Ltd., Dalian
West Pacific Petrochemical Company Ltd. and Lanzhou
Petrochemical Company Ltd. and twelve 5 million t/a special
refineries. At the same time six small refineries and
ninety-eight production units with low effect and high
consumption have been shut down.
   These effective measures have greatly upgraded the overall
refining strength and level in PetroChina. Compared with the
status 5 years ago, the crude oil processing capacity in
PetroChina has increased from 109.8 million t/a to 118.0 million
t/a, a growth of 7.4%. The average processing capacity per
refinery has increased from 3.41 million t/a to 4.36 million t/a,
a growth of 28%. The average processing capacity per unit has
also made a considerable growth.
   Experts say that the mix of refining operations in PetroChina
is more rational and the scale of refining units is larger. It
reflects the constant progress and upgrading of the research and
development level in the company.
   The renovation and the construction of refining units in
PetroChina today use a lot of domestic and foreign advanced
technologies. New technologies and economic and technical
indexes in Dalian West Pacific Petrochemical Company Ltd.,
Lanzhou Petrochemical Company Ltd., Dalian Petrochemical
Company Ltd., Jinzhou Petrochemical Company Ltd., Jinxi
Petrochemical Company Ltd., Fushun Petrochemical Company Ltd.,
Daqing Refining & Chemical Co., Ltd., Kramay Petrochemical
Company Ltd. and Lubricant Co., Ltd. have all reached the world
advanced level.
   In spite of an overall unsatisfactory profit-earning status
in the refining operation of PetroChina, Dalian West Pacific
Petrochemical Company Ltd. still reaped profits and became one
of the three profit-earning enterprises in the oil refining
operation of PetroChina in the first half of 2005 (The other two
enterprises were Kramay Petrochemical Company Ltd. and Liaohe
Petrochemical Company Ltd.). One of the key reasons is that
Dalian West Pacific Petrochemical Company Ltd. processed high
sulfur-contained crude oil. The operation of its 2.0 million t/a
residuum hydrotreating unit greatly helped reduce the raw
material cost and also served a good example of the raw material
optimization conducted by PetroChina.
   The research and development and the technical
de-bottlenecking in the refining operation of PetroChina have
also made remarkable achievements. In the years from 2001 to the
first half of 2005 the refining operation of PetroChina has made
a total investment of RMB540 million in science and technology
projects, approved 295 projects and completed 157 research
achievement registrations. The catalytic cracking catalyst for
reducing gasoline olefins won the prize of the state for
scientific and technological progress in 2004.
   Experts say that technical progress will become the main
motive force for the rehabilitation of the refining operation
in PetroChina. The constant upgrading of refining technologies
will also pave a way for the boom of downstream chemical sectors.


Prominence in chemical operation


The chemical operation in PetroChina made remarkable advances
in the first half of 2005. The output had a stable increase and
a profit of RMB5.756 billion was reaped. The chemical operation
once again became an important growth point of PetroChina.
   As a matter of fact, the chemical operation in PetroChina has
maintained a stable growth in the past 5 years. The output of
ethylene reached 1.846 million tons in 2004, an increase of 27%
over 2000. The output of major chemical commodities reached
12.386 million tons, an increase of 4.5% over the same period
of 2004. The total sales amount of chemical products reached
13.05 million tons, an increase of 10.6%.
   Experts say that “technical progress has played a
significant role in such great changes in the chemical
operation.”
   It is reported that Dushanzi Petrochemical Company Ltd.,
Jilin Petrochemical Company Ltd. and Lanzhou Petrochemical
Company Ltd. have conducted ethylene raw material adaptability
renovation and achieved the successful use of light ethylene raw
materials.
   By the end of 2004,, the chemical operation of PetroChina made
a total investment of RMB20.7 billion in technical renovation
and the large-scale and differential production of ethylene and
polyolefins has been effectively promoted. The chemical
fertilizer renovation and expansion to be soon completed will
also consolidate the leading position of the company in the
nitrogenous fertilizer sector. Besides, the distribution of
synthetic fiber raw materials has also been readjusted to
consolidate the advantages of special products.
   In technical innovation PetroChina has focused on the
development of new chemical products, fully employed the leading
role of regional companies and strengthened the product
development and upgrading in recent years. Since its listing in
the stock market, PetroChina has developed 170 new chemical
products and the output of new products has reached nearly 1.0
million tons. The proportion of synthetic resin special
materials has increased from 18% to 41% and the proportion of
differential synthetic fibers has increased from 12% to 25.6%.
   Besides, the chemical operation has also actively conducted
the integration between production and sales and turned the
product advantage into the market advantage. Chemical products
in PetroChina have therefore gained high reputation both at home
and abroad.
   PetroChina will establish a research institute of refining
and chemical at the end of 2005. The establishment of the
institute will enable partial major research and development
projects to make substantial breakthroughs within 3 years and
enable refining and chemical operations of