Dalian Port, the largest port company specializing in oil products and liquefied chemicals in northeastern China, is planning a domestic listing for as early as 2009.

In preparation for the listing, Dalian Port plans to increase its capital expenditure to US$140 million.

Jiang Luning, general manager of Dalian Port, said next year an A-share listing is possible but not definite because it will depend on the market situation and other factors.

Dalian Port plans to build 12 more crude oil storage tanks, which will have a total capacity of one to 1.2 million tonnes.

The firm expects its production of crude oil and refined oil to rise 10% this year. Last year it produced about 33.4 million tonnes.
Source: CargoNews Asia

Dalian Port, the largest port company specializing in oil products and liquefied chemicals in northeastern China, is planning a domestic listing for as early as 2009.

As part of this move to be a listed company Dalian Port plans to increase its capital expenditure to US$140 million.

However, the listing is not yet definitive. Jiang Luning, general manager of Dalian Port, said A-share listing is possible but not definite because it will depend on the market situation and other factors.

With its investment Dalian Port plans to build 12 more crude oil storage tanks, which will have a total capacity of one to 1.2 million tonnes.

The firm expects its production of crude oil and refined oil to rise 10% this year. Last year it produced about 33.4 million tonnes.
Source: CargoNews Asia

Trucks are the mules of China’s spectacularly expanding economy — ubiquitous and essential, yet highly noxious.

Trucks in China burn diesel fuel contaminated with more than 130 times the pollution-causing sulfur that the United States allows in most diesel.

The 10 million trucks on Chinese roads, more than a quarter of all vehicles in China are a major reason China accounts for half the world’s annual increase in oil consumption.

Cleaning up truck pollution presents complex problems for China’s leaders.

Forcing businesses and farmers to buy more expensive vehicles could put a drag on the economy. Oil giants like Sinopec, losing money on every gallon of diesel they refine because of the low sales cost, upgrade refineries slowly, if at all.

Evan Jia, a Sinopec spokesman said, ‘Sinopec is trying our best to purchase low-quality crudes - much heavier and more sulfur content. We buy those kinds of crudes to lower the purchasing cost.’

Low state-subsidized diesel prices frequently make trucks more cost-effective than trains, which pollute less. Demand for diesel at service stations is so great, and supplies are so tight, that rationing and shortages have become common.

Since 2000, sales of heavy-duty trucks have risen sixfold while car sales have risen eightfold.

Mainland Chinese atmospheric scientists concluded in an analysis this year in The Journal of Environmental Sciences that in Guangzhou, particles were the pollutant farthest out of line with air-quality norms 226 days a year.

A separate academic study of diesel exhaust in Guangzhou found that Chinese trucks put out particles in unusually large quantities and sizes. For the very long, thorough and balanced article click on Source.
Source: International Herald Tribune

Senior officials with the National Development and Reform Commission state that China will continue to develop its service industry and make logistics a key sector.

Zhu Hongren, deputy chief of the Bureau of Economic Operations under NDRC, China’s top planning agency, said, ‘China’s overall industry production maintained stable growth, with slower expansion in a few high energy-consuming and polluting sectors. The service industry, which is greener, kept a double-digit growth boosted by sectors such as logistics.’

The figures are amazing:

Industrial output rose 18.5% in the first nine months, accelerating 1.5 percentage points from a year earlier.
The profit reaped by industrial enterprises surged 37% year on year to RMB1.56 trillion (US$208 billion) through August.
Sales of China’s service industry expanded 11% to RMB6.4 trillion through September.
The logistics sector posted earnings of RMB1.13 trillion through the third quarter, an increase of 17.6% from a year earlier.

Wang Huimin, an NDRC official, said, ‘Fixed-assets investment in logistics increased 18.8% to RMB943 billion, which is expected to further boost the development of the industry.’

However, the rising price of raw materials puts the government under pressure to strengthen economic controls.

China has now raised the prices of gasoline, diesel and aviation kerosene by RMB500 per ton, further boosting the producer price index and consumer price index.

Zhu Hongren said, ‘We are fully aware of the accelerating growth of production costs and will take some measures to stabilize the momentum.’ He gave no further details.

He added, ‘As for the price increase of oil, from our observation the supply is relatively stable so far and can meet the demand of the market.’
Source: Shanghai Daily

Shares in Asian shipping companies are starting to stagnate because of concerns that rising costs could hurt earnings.

China Cosco Holdings, owner of the largest Asian container line, has seen its shares fall 25% this month from a record high July 31.

Neptune Orient Lines, which operates the region’s fourth-largest container line, has dropped 34% since peaking last month. Its costs will rise 1% in the second half, twice as fast as in the first, as fuel prices rise.

Alex Chang, an analyst with UBS in Hong Kong is not optiministic. Energy costs have jumped more than 30% this year and surcharges to move containers in and out of ports are rising, undermining shipping lines’ efforts to stem two years of profit declines. The companies are also paying more for vessels as shipbuilders charge higher prices because, paradoxically, of a flood of orders. Orders are made long before any market variations can be intelligently predict.

The 20 biggest Asian container shipping lines by market capitalization are valued, on average, at 30 times earnings. That exceeds the average multiple of 21 for the Bloomberg World Transportation index of 108 companies.

The price of ship fuel climbed to a record high last month after crude oil reached the highest level in more than 11 months. The prices are increasing largely because of demand from China. According to Mirae Asset Securities in Seoul bunker fuel costs make up as much as 15% of a shipping line’s total expenses.
Source: International Herald Tribune

The idea seems remarkable — converting coal to oil. It comes down to cost. If the price of oil is high enough then it is financially viable to do the conversion. Where it will be happening in China is Erdos, in north China’s Inner Mongolia Autonomous Region.

It is happening and soon. Wang Yulong, deputy manager in charge of the coal liquefying arm of the Liquefied CoalOil Company of Shenhua Group Corporation, the country’s top coal producer which is 100% state owned, said, ‘The project is in its final stage of construction and will start production late in the year.’

Coal liquefaction is a process that converts coal from a solid state into liquid fuels, usually to provide substitutes for petroleum products. While crude oil was widely available and inexpensive then the process was not worthwhile. At current oil prices it is viable and will probably become more so in years to come.

The facility in Erdos will produce mostly diesel oil, plus liquefied petroleum gas (LPG), naphtha (a volatile, flammable liquid hydrocarbon mixture), and hydroxybenzene. On completion, it will be the largest facility in the world producing liquids from coal using a technology known as direct gasification.

There is one in South Africa which produces transport fuel from coal but in a different way. No one, in fact, is talking in any detail about the technology being used for the new plant in China.

Listed as a key state project to help deal with China’s petroleum security concerns, the massive Erdos coal liquefaction facility began construction in August 2004. During an inspection tour in June 2006, Chinese Premier Wen Jiabao called the project a major scientific and technological experiment.

With a budget of RMB12.3 billion yuan and an annual production capacity of five million tons of oil, the project will be completed in two stages.

Wang Yulong said, ‘We’re installing the first production line and its infrastructure. On completion, the line will be able to process annually 3.45 million tons of coal into 1.08 million tons of oil, including 720,000 tons of diesel oil.’

The technology was trialed at a specially built converter in Shanghai. Wang Yulong said, ‘The project in Erdos is about 1,000 times the size of the Shanghai model.’ It is claimed that it will be environmentally friendly.

The equation is simple. 3.4 to 3.5 tons of coal can produce a ton of oil. If the price of a barrel of crude is above $35 it is worth doing. Oil prices in the international market currently hover around $70 a barrel. An amazing development and one worth watching closely.
Source: Jongo News

Industry analysts believe competition will be fierce for upcoming shipping contracts. These are expected after the Chinese government encouraged the buildup of the country’s oil shipping capacity out of concerns about energy security.

Of the oil the country imported last year only 16% was brought in on Chinese tankers. The assistant director of the China Association of the National Shipbuilding Industry, Yang Xinkun, said the country aims to raise that level to 50% by 2010.

Yang Xinkun said, ‘However, the companies that export oil to China all have their own shipping subsidiaries and affiliated tankers, and they all want to make profits, so it will be difficult for the new Chinese oil carriers to secure contracts.’

Peng Cuihong, a researcher with the Institute of Comprehensive Transportation under the National Development and Reform Commission, China’s top economic planner, told state media that at least 60% of oil import transport capacity should be filled by Chinese tankers in order to avoid any potential supply disruption. The same report quoted an official from the Ministry of Transportation as saying that China will build more oil tankers to meet rising import demand and reduce its dependence on foreign carriers.
China currently owns around 25 very large crude carriers (VLCC), which carry about 300,000 tons of oil each.

Domestic shipyards, including Dalian Shipbuilding Industry and China Ocean Shipping, the country’s two largest, have been busy building such vessels, as well as making orders to foreign ship builders in a bid to reach oil transportation capacity equal to 50% of the country’s oil imports by 2015.

The Hong Kong newspaper Singtao Daily said as many as 65 VLCCs are likely to be ordered before 2012 at the cost of $7.1 billion.

It seems something of a confused scene which will only clarify with time.
Source: Interfax

China’s annual crude oil demand may rise to about 550 million tons by 2020 which is a fairly staggering 11 million barrels a day.

Han Wenke, director general of the Energy Research Institute under the National Development and Reform Commission and seen in our illustration, told an industry conference that this compares with last year’s 320 million tons.

He said, ‘My estimate is a bit higher than the projection made by our government but lower than the figure projected by International Energy Agency.’

Han Wenke believes the forecast of 600 million tons by Paris-based IEA is inaccurate as the oil policy advisory has overestimated China’s transport fuel use.

He said, ‘They may have reached their 600-million-ton forecast out of the potential growing auto ownership in China. But China is using its railroad network to reduce nationwide logistics costs and encourage public transport in major cities.

‘The auto sector is growing fast, but China has also turned to diversification as its priority in securing energy supply.’

The problem is that the amount that China can produce is limited. Han Wenke said China may be able to produce a total amount of crude oil of between 146.3 million tons and 187.5 million tons in 2020, against 183.7 million tons last year.

These forecasts add pressure on China showing it will have to rely more on imports.

China’s net crude imports hit a record high of 3.48 million barrels a day last month, beating the previous record of 3.25 million barrels a day set last September.
Source: Shanghai Daily

Shanghai Waigaoqiao Shipbuilding has delivered the hull of the nation’s biggest FPSO — floating production, storage and offloading — vessel (not the biggest ship for which title there are several contenders) to ConocoPhillips China. This is the largest of its type — and the most expensive ship China has ever built. The 300,000-deadweight-ton vessel cost around $230 million. The illustration is of the shipyard, not of the vessel itself.

The ship, named Hai Yang Shi You 117, is among the largest of its type in the world. ‘The ship used the most advanced technologies in the world,’ said Wang Qi, assistant to the president of the Shanghai shipyard. ‘Its timely delivery marks Waigaoqiao becoming a qualified subcontractor in the global offshore engineering industry.’

Besides being able to load and process raw crude, and to store and offload stabilized crude, an FPSO vessel can also serve as the production unit for an offshore crude or natural gas exploration project.

This new FPSO vessel, which can store as much as two million barrels of crude oil, will be used at China’s largest offshore oil field, Peng Lai 19-3, located in Bohai Bay in the country’s northeast.

The vessel is 323 meters long and 63 meters wide. The depth of the hull is 32.5 meters and the distance from the bottom to the chimney is 71 meters, which is as high as a 24-floor building.

The new FPSO is expected to be put into operation before the Beijing Olympic Games.
Source: China.or.cn

An oil reserve base may be built at China’s southernmost island province of Hainan. Wei Liucheng, secretary of the Hainan Provincial Committee, said, ‘We are currently negotiating with international petroleum syndicates to this end.’

Wei said that ‘Hainan boasts distinctive advantages in building both a national strategic oil reserve base and a commercial oil reserve base.’

He said the island lies near main international oil shipping routes, and that any oil reserve would be complemented by the 300,000-ton crude oil wharf currently located in the Yangpu Economic Development Zone on the island.

China is already building four first-phase strategic oil reserve bases in Zhenhai and Daishan in Zhejiang Province, Huangdao near Qingdao City of Shandong Province and Dalian in Liaoning Province.

Wei is a deputy to the Tenth National People’s Congress (NPC), China’s top legislature currently in its annual session in Beijing. His remarks came at a panel discussion of Hainan lawmakers.
Source: Xinhua