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5 White Paper on the Business Environment in China
es and increase domestic capacity, the government announced complex led by PetroChina and also including Qatar Petro-
in September 2013 that it was set to have invested “80 bil- leum—was put on hold. e o cial reason cited for the delay
lion yuan ($13.07 billion) in oil and gas exploration [over the was di culty nding a suitable site to construct the complex;
course of the year].”41 informally the “need for a massive land ll project” costing up
to $1.6 billion and “resistance from local residents concerned
Historically, total investment in the sector was reported by about worsening pollution” were both agged as in uencing
Xinhua to have “risen from 19 billion yuan in 2002 to 67.3 the decision.45
billion yuan in 2011.”41
e Zhejiang project, in which PetroChina is expected
Li Shousheng, Vice-Chairman of the China Petroleum to hold a 51 percent stake while Shell and Qatar Petroleum
and Chemical Industry Federation warns that “China’s stra- would each hold 24.5 percent, began in 2012 and targeted a
tegic petroleum reserve is a key to addressing the issues of re ning capacity of 400,000 barrels per day in addition to an-
the national economy and energy su ciency during the 12th nual ethylene output of 1.2 million tons.45
Five-Year Plan period. ere is a huge gap between the supply
and demand for energy. Energy shortage could become a very Another PetroChina partner found itself in a similar pre-
prominent problem if an emergency occurs.”40 dicament toward the end of 2013: a $6.4 billion gas project
being built by Chevron and PetroChina was reported to have
More recently, China Petrochemical Corporation Chair- been delayed on more than one occasion over disputes about
man Fu Chengyu warned that “China must embrace domes- the technical methods to be used in developing “tricky elds.”
tic resources besides oil, such as coal, in a bid to curtail rising
crude imports, which hit about 254 million tons in 2011, up e project, Chevron’s largest in China, was initially expected
6% from a year earlier.”42 by PetroChina to begin operations in 2010. Four years later, it
has yet to have had a “ rst gas” date announced.46
According to Mr. Fu, “China [will] require 600 million tons
of crude annually by 2020” if demand continues at its current Common delays in project openings contrast with concerns
trajectory and “China will really threaten the world.”42 about overcapacity. In recent years China Daily had indicated
that such overcapacity in the petrochemical industry would
Unsurprisingly, however, oil continues to ow and the na- continue to cause di culties, and noted that uctuating oil
tion’s re ning capability has grown apace. A Sinopec report costs on the world market have led the government to adjust
indicated that “Plants in China may be able to re ne 750 mil- domestic costs as fast as 4 percent over 22 consecutive days.47
lion metric tons of crude oil annually by the end of 2015, Between the adoption of this pricing mechanism in 2009 and
compared with an estimated 507.5 million tons by the end October 2011, authorities adjusted fuel prices 16 times, with
of [2010].”39 10 of those adjustments being increases.48
Similarly, the report noted that “ e share of foreign par- An NDRC o cial also notes that the pricing adjustment
ticipation in China’s domestic re ning capacity may rise to mechanism can be used to ease in ationary pressure; the same
31.5 million tons annually, or 4.2 percent of the nation’s total, o cial furthermore indicated that a “more market-oriented”
by 2015, from the current 10.5 million tons.”39 mechanism (to address the lack of transparency and other is-
sues with the current system) is under study.48
e rst foreign-Chinese petrochemical joint venture
went into operation in Fujian Province in November 2009. At the time of writing, the NRDC had raised49 and low-
It is half-owned by Sinopec and the Fujian provincial govern- ered50 fuel prices four times each over the course of 2012, with
ment, and half owned by Exxon Mobil and Saudi Aramco, the last rate cut following two successive increases which were,
who hold 25 percent stakes each,43 and was praised by Lin according to one analyst, intended to “reduce re neries’ losses
Boqiang, head of the Center of China Energy Economics Re- and prevent fuel shortages, which is important to maintain
search at Xiamen University, as being “a rather wise choice steady economic growth.”49
to encourage oil-rich countries to make more investments in
China,” which can help the PRC to secure (presumably stra- Projections from the China Petroleum and Chemical In-
tegic) oil reserves.43 dustry Federation projected a 5 percent slowing of apparent
oil consumption growth between 2011 and 2015 due to a
One place to put those reserves may be an upcoming slowing of economic expansion and, to some degree, emis-
“200,000 cubic meter oil products storage facility” in Tianjin, sion-reduction e orts.51
the result of a joint venture between Royal Dutch Shell’s Chi-
na-based business and the Tianjin State Farms Agribusiness In 2011 year-on-year growth in oil consumption was re-
Group, noteworthy if only for a foreign company’s involve- ported to be at 6 percent.51
ment in the project. e $87 million facility is expected to
begin operation in June 2013. 44 More recently, independently-owned (but not foreign-
owned) ‘teapot’ re neries—so-called because of their small
More recently, another project involving Royal Dutch overall capacity—have been feuding with major state-owned
Shell—this one a $13 billion re nery and petrochemical petrochemical companies over responsibility for a recent
118
es and increase domestic capacity, the government announced complex led by PetroChina and also including Qatar Petro-
in September 2013 that it was set to have invested “80 bil- leum—was put on hold. e o cial reason cited for the delay
lion yuan ($13.07 billion) in oil and gas exploration [over the was di culty nding a suitable site to construct the complex;
course of the year].”41 informally the “need for a massive land ll project” costing up
to $1.6 billion and “resistance from local residents concerned
Historically, total investment in the sector was reported by about worsening pollution” were both agged as in uencing
Xinhua to have “risen from 19 billion yuan in 2002 to 67.3 the decision.45
billion yuan in 2011.”41
e Zhejiang project, in which PetroChina is expected
Li Shousheng, Vice-Chairman of the China Petroleum to hold a 51 percent stake while Shell and Qatar Petroleum
and Chemical Industry Federation warns that “China’s stra- would each hold 24.5 percent, began in 2012 and targeted a
tegic petroleum reserve is a key to addressing the issues of re ning capacity of 400,000 barrels per day in addition to an-
the national economy and energy su ciency during the 12th nual ethylene output of 1.2 million tons.45
Five-Year Plan period. ere is a huge gap between the supply
and demand for energy. Energy shortage could become a very Another PetroChina partner found itself in a similar pre-
prominent problem if an emergency occurs.”40 dicament toward the end of 2013: a $6.4 billion gas project
being built by Chevron and PetroChina was reported to have
More recently, China Petrochemical Corporation Chair- been delayed on more than one occasion over disputes about
man Fu Chengyu warned that “China must embrace domes- the technical methods to be used in developing “tricky elds.”
tic resources besides oil, such as coal, in a bid to curtail rising
crude imports, which hit about 254 million tons in 2011, up e project, Chevron’s largest in China, was initially expected
6% from a year earlier.”42 by PetroChina to begin operations in 2010. Four years later, it
has yet to have had a “ rst gas” date announced.46
According to Mr. Fu, “China [will] require 600 million tons
of crude annually by 2020” if demand continues at its current Common delays in project openings contrast with concerns
trajectory and “China will really threaten the world.”42 about overcapacity. In recent years China Daily had indicated
that such overcapacity in the petrochemical industry would
Unsurprisingly, however, oil continues to ow and the na- continue to cause di culties, and noted that uctuating oil
tion’s re ning capability has grown apace. A Sinopec report costs on the world market have led the government to adjust
indicated that “Plants in China may be able to re ne 750 mil- domestic costs as fast as 4 percent over 22 consecutive days.47
lion metric tons of crude oil annually by the end of 2015, Between the adoption of this pricing mechanism in 2009 and
compared with an estimated 507.5 million tons by the end October 2011, authorities adjusted fuel prices 16 times, with
of [2010].”39 10 of those adjustments being increases.48
Similarly, the report noted that “ e share of foreign par- An NDRC o cial also notes that the pricing adjustment
ticipation in China’s domestic re ning capacity may rise to mechanism can be used to ease in ationary pressure; the same
31.5 million tons annually, or 4.2 percent of the nation’s total, o cial furthermore indicated that a “more market-oriented”
by 2015, from the current 10.5 million tons.”39 mechanism (to address the lack of transparency and other is-
sues with the current system) is under study.48
e rst foreign-Chinese petrochemical joint venture
went into operation in Fujian Province in November 2009. At the time of writing, the NRDC had raised49 and low-
It is half-owned by Sinopec and the Fujian provincial govern- ered50 fuel prices four times each over the course of 2012, with
ment, and half owned by Exxon Mobil and Saudi Aramco, the last rate cut following two successive increases which were,
who hold 25 percent stakes each,43 and was praised by Lin according to one analyst, intended to “reduce re neries’ losses
Boqiang, head of the Center of China Energy Economics Re- and prevent fuel shortages, which is important to maintain
search at Xiamen University, as being “a rather wise choice steady economic growth.”49
to encourage oil-rich countries to make more investments in
China,” which can help the PRC to secure (presumably stra- Projections from the China Petroleum and Chemical In-
tegic) oil reserves.43 dustry Federation projected a 5 percent slowing of apparent
oil consumption growth between 2011 and 2015 due to a
One place to put those reserves may be an upcoming slowing of economic expansion and, to some degree, emis-
“200,000 cubic meter oil products storage facility” in Tianjin, sion-reduction e orts.51
the result of a joint venture between Royal Dutch Shell’s Chi-
na-based business and the Tianjin State Farms Agribusiness In 2011 year-on-year growth in oil consumption was re-
Group, noteworthy if only for a foreign company’s involve- ported to be at 6 percent.51
ment in the project. e $87 million facility is expected to
begin operation in June 2013. 44 More recently, independently-owned (but not foreign-
owned) ‘teapot’ re neries—so-called because of their small
More recently, another project involving Royal Dutch overall capacity—have been feuding with major state-owned
Shell—this one a $13 billion re nery and petrochemical petrochemical companies over responsibility for a recent
118
