China's land refiners want to give up equity for oil sources

Li Xiangping, chairman of the board of directors of Shandong Dongming Petrochemical Group, signed a preliminary agreement in Qatar with Qatar Investment and Development Group and Hamad Bin Suhaim Enterprises to buy a 49 per cent stake in Dongming Petrochemical Group for $5bn.
It is understood that Dongming Petrochemical is mainly engaged in refining, organic chemical raw materials, synthetic materials, chlor-alkali, thermoelectrch and other industries production and operation, its annual crude oil processing capacity of 12 million tons, ranking first in the domestic refining industry, and with PetroChina joint venture to build an annual transmission capacity of 20 million tons of the Japan-East pipeline, in terms of installation capacity and crude oil storage and transportation has the conditions for the construction of a modern petrochemical base.
, according to Cai Guangsen, finance director of Dongming Petrochemical Group, who participated in the negotiations, the joint venture agreement mainly includes four elements: First, participation in the construction of terminal gas stations; The second is to take a stake in the Luze refinery; Third, the use of Qatar's abundant natural gas resources in the domestic construction of liquefied natural gas (LNG) stations; Fourth, a trading company was established in Qatar to address the supply of crude oil and the chemical raw materials required for import at the Luze refinery. In addition, the cash from Dongming Petrochemical will fund the projects it is working on. These projects include the establishment and operation of 1,000 petrol stations in six provinces within 300 km of the Dongming Petrochemical Yuze refinery, to which one third of the output of the Luze refinery will be supplied; And in the Qinzhou region of Guangxi to build a 3 million tons / year LNG receiving station, including the construction of terminals, terminals, regasification facilities and storage tank areas.
said the agreement was expected to be reached in the fourth quarter of this year because the joint venture involved legal processes such as asset assessment. After the establishment of the joint venture, Shandong's refining industry will break the pattern of restricted raw material sources and product sales, inequality plays a good role in leading and promoting.
Lin Boqiang, a professor at Xiamen University and director of the China Energy Economics Research Center, told the China Chemical News that Dongming Petrochemical should be in the following considerations to cooperate with Middle Eastern oil companies by selling shares. First, China has a vast downstream oil and gas market, the Middle East has abundant oil and gas resources, the cooperation between the two sides is obviously complementary. Second, the right to import crude oil and the stable source of oil have been an important factor restricting the expansion of refining enterprises. With the advance of China's energy reform, Dongming Petrochemical, through the transfer of equity, is expected to break through the country's restrictions on crude oil imports, crack the problem of oil sources. Third, LNG has a strong market outlook in the long run. China's demand for natural gas grew last year, with one-third of its imports. Through cooperation to obtain Qatar LNG resources, help Dongming Petrochemical to accelerate the layout of the national LNG market, to achieve strategic transformation.