China's Private Oil Firms: Breaking through the Dilemma - "Going Out"

On November 27th, it was a very important day for the National Association of Industry and Commerce Petroleum Chamber of Commerce. Private entrepreneurs from all over the country's oil industry gathered together to reflect on the institutional innovation and future growth of China's oil development.

Zhang Yue, president of the National Association of Industry and Commerce Oil Industry Chambers and chairman of Taidi Group Holding Co., Ltd., stated at the annual meeting that although China’s oil system is gradually opening up, we have liberalized retail and liberalized with the support of the country. Wholesale and liberalization of the pricing mechanism are basically in line with international standards. However, the monopoly of the oil market in China still exists, and we need to make further efforts to further improve. To break out of the internal monopoly

In October 2011, a diesel affair swept most of our country. For PetroChina and Sinopec, they blamed the private oil companies for the oil shortage and caused oil shortages. The oil industry chamber of commerce has twice held a press conference to respond. At this annual meeting, Zhang Yue emphasized once again that the responsibility for the “oil shortage” was not in the private enterprises: Our private enterprises did not have oil sources, how to refine oil, and how did they pump oil? If the situation of the entire monopoly does not improve further, it will affect our country. The interest is certainly unfavorable.

It is understood that at present, the private enterprises in the petroleum industry have a very poor living environment. More than 50% of the refineries are purchased by several large state-owned enterprises. Therefore, the oil resources that private retailers rely on are more scarce.

"Break the monopoly of the oil market is the demand of private enterprises, but also the direction of our future reform." Zhang Yue said.

To this end, the National Association of Industry and Commerce Petroleum Chamber of Commerce has done a lot of work in recent years, through the submission of six proposals, called for the establishment of a fair and equitable oil market, to ensure the security of China's oil strategy and fair market trade.

"These proposals have received a reply and the contents are very positive. Let us see the hope of the national oil system reform," said Zhang Yue.

Zhang Yue said that the Petroleum Chamber of Commerce will complete two major events next year: First, actively, harmoniously and reasonably appealing for a reasonable reform of oil quality to make it more in line with our country’s oil strategic interests, and to make our country’s oil security better. The second is to urge private enterprises to respond to the country’s call to “go global” in the new year. This is the main theme of our coming year. The oil system of the entire world is open, and our country is gradually opening up to the world.

The government should continue to deepen the reform of the oil management system

"In addition to calling for breaking the monopoly and opening up overseas markets, private oil companies also need to strengthen their own strengths in order to gain a firm foothold in the domestic and international competition." Jiang Xinmin, deputy director of the Energy Research Institute of the National Development and Reform Commission pointed out in his speech at the annual meeting.

Jiang Xinmin said that the government must continue to deepen the reform of the oil management system and actively promote innovation in the market mechanism. According to the six key points of the "12th Five-Year Plan" energy plan, the development of the petroleum and petrochemical industry will focus on structural adjustment and optimization, transformation of economic development methods, speeding up of industrial restructuring, adjustment of the structure, and enhancement of the competitiveness of the industry. Therefore, private enterprises must pay attention to the quality of development, improve the ability of technological research and development, enhance the ability of independent innovation, increase the added value of products through fine processing of products, and achieve efficient development.

At the annual meeting, in May last year, the State Council issued the "Opinions on Encouraging and Guiding the Healthy Development of Private Investment" (ie, the "new 36") as the topic of hot discussion among the participants. The “New 36 Article” proposes to encourage private capital to participate in the construction of oil and natural gas, and support private capital in oil and gas exploration and development. However, the implementation is not satisfactory. How to solve the difficulties and contradictions encountered in the implementation of the “New 36 Article”? Experts at the meeting suggested that: First of all, we should improve the international linkage mechanism for oil prices; Second, reform the policy of investing state-owned resources to protect the interests of national ownership; and third, implement the central policy. Allowing private enterprises to enter the oil industry; Fourth, the scope of oil price adjustment should be appropriate, taking into account domestic inflationary pressures; Fifth, regulating the relationship between industry interests, to curb the expansion of unfair distribution.

Finding a way out

In spite of the past year, the development of privately-owned oil companies is facing increasingly fierce competition in the international and domestic environment, increasing supply of raw materials, and many other difficulties. In the face of difficulties, private oil companies that have struggled for many years have not yet stood still, but actively Finding new outlets. Zhou Jingping, general manager of Shandong Jincheng Petrochemical Co., Ltd., introduced his experience at the meeting: “The current problems and difficulties are still many, especially the shortage of raw materials. We have produced less than 2,000 tons at the time of production. In the midst of difficulties, we walked out of the The unique way to change the development of ideas, introduce new devices, and improve product quality.We have been focusing on deep processing and development, producing special devices, conducting energy-saving transformations, investing 150 million yuan to realize a series of comprehensive energy-saving transformation projects. Bigger and stronger, focusing on technological innovation, our patents and achievements have fully improved the efficiency of the company.”

Xiongguan Dadao really like iron, but now the pace to go from scratch. To help private oil companies “go global”, the Petroleum Chamber of Commerce established a platform for foreign exchanges. At this annual meeting, the Petroleum Chamber of Commerce established a platform for foreign exchanges and invited diplomats and counsellors from Cuba, Ecuador, Pakistan, Uruguay and other countries to China. They asked them to introduce their own economic conditions and oil storage situation, and to connect with the majority of private enterprises, and open up more channels for private enterprises to "go global".

Zhang Yue finally stated that we are responding to the government’s call and that going out is the main theme of our coming year. When Chinese private companies go out, they will go very well.