Benchmarking Singapore, Achieving "Bend Overtaking" Zhejiang Free Trade Pilot Area Oil And Gas Industry Chain Fast

3 at the end of the month in Zhoushan, Zhejiang, the sea breeze in spring is still slightly chill, standing in the Zhoushan harbor area overlooking, winding coastline, ships, warehouses and wharves panoramic view.

This is the appearance of China (Zhejiang) free trade pilot area (hereinafter referred to as the "Zhejiang free trade zone") which will soon come into the 2nd Anniversary listing. It is understood that the Zhejiang Free Trade Zone, which is 2nd anniversary, has set three first in the country: it has become the first area of oil companies in the country; it has jumped to be the largest refueling port in the country; and it has built the first nationwide 40 million tonnage refining and chemical integration project controlled by the private sector.

Liberia's "Anna" tanker stops at Ningbo Zhoushan port Zhoushan Pisi Island Shihua terminal. - Xinhua News Agency

At the end of March, the economic report reporters visited the Zhejiang free trade area in twenty-first Century. In the interview, they learned that the Zhejiang free trade area put forward the macro development goal of "benchmarking Singapore". The oil and gas industry is extending to the upstream and downstream industry chain, forming a situation of symbiotic and common prosperity among private enterprises, state enterprises and foreign-funded enterprises.

At the same time, the two year old Zhejiang free trade zone also has "growing pains". Faced with the development gap caused by the poor fuel prices of bonded fuels for many years, the Zhejiang free trade area is now actively laying the strength of the oil and gas industry. But how to make good use of the latest international "sulfur restriction" to realize the "overtaking" of the Singapore port has become an important opportunity and challenge currently facing Zhejiang's free trade area.

From the coastal port to the "gas station" at sea

In twenty-first Century, the economic news reporter learned that, since its inception, the Zhejiang free trade zone has made bonded fuel oil a breakthrough for the oil industry chain. The essence behind it is the transformation of Zhoushan port from the port cargo trade Dagang to the "gas station" at sea.

Zhoushan, Zhejiang, is located at the junction of the East China Gold Coast line and the Yangtze golden waterway. Since ancient times, Zhoushan port has been a natural harbor for ship docking and trade in goods. According to the statistics of Ningbo port, before the establishment of the Zhejiang Free Trade Zone, the cargo throughput of Zhoushan port exceeded 9 billion tons in 2016, becoming the world's first "9 billion tons" port, while the port of Singapore only had 5.93 million tons in the same period.

However, the huge volume of cargo throughput has not been associated with the sale of Ningbo bonded fuel oil. At that time, the embarrassing situation faced by Zhoushan port was that over the years, more than 10000 tons of international ships headed for Zhoushan sea, but most of them chose to refuel in Singapore.

"Due to factors such as price and financial environment, there are still some gaps between Zhoushan's bonded fuel oil trade and Singapore port." Ying Zhongming, director of the Zhejiang free trade zone policy and Regulation Bureau, told the twenty-first Century economic report reporter that before the listing of the Zhejiang Free Trade Zone, the huge cargo throughput was not consistent with the actual sale of bonded fuel oil, which was obviously different from the international important cargo port.

Data show that in 2016, Ningbo port Zhoushan bonded fuel oil direct supply amounted to 1 million 60 thousand tons, of which Zhoushan port was only 910 thousand tons, while the Singapore port's bonded fuel oil had reached 48 million 600 thousand tons in the same period. Comparing the two, although the trade of goods in Zhoushan is far ahead of that in Singapore, there is a huge "gap" between the two ports in the operation of bonded fuel oil.

Against this background, Zhoushan port has ushered in an important historical period besides the development of cargo trade and shipbuilding industry. In March 15, 2017, the State Council approved the general plan of China (Zhejiang) free trade pilot area, which was formally established in Zhejiang on April 1st of the same year.

Xia Wenzhong, deputy director of the Zhejiang Free Trade Zone Management Committee, told the twenty-first Century economic report reporter that the whole industry chain of oil and gas, including oil and gas, processing, trading, supply and supporting services, is one of the five breakthroughs. Zhejiang's free trade zone has become the first breakthrough to make up the gap between Zhoushan port and the international port area.

In twenty-first Century, an economic report reporter learned that the bonded fuel oil in Zhoushan needs to be imported from Singapore for further reconciliation. At the beginning of the establishment of the Zhejiang Free Trade Zone, the oil price difference between Zhoushan and Singapore was about 20 US dollars / ton.

In order to narrow the gap and further open up a breakthrough, the Zhejiang free trade zone has pioneered the regulatory and facilitation measures of "one ship, more supply", "first supply and later reporting" and "one warehouse and more supply". Driven by a series of related policies, the price difference between bonded fuel oil in Zhoushan and Singapore in 2019 narrowed to around 5 to 8 dollars per ton.

Public information shows that in 2018, the supply of Zhoushan's bonded fuel oil amounted to 3 million 593 thousand tons, nearly double that of 1 million 800 thousand tons in 2017, accounting for more than 30% of the total amount of the country, and the settlement volume reached 5 million 660 thousand tons, accounting for more than 50% of the whole country, and it jumped over Shanghai to become the largest refueling port in China. At the same time, Long Beach port and Tokyo port are among the ten largest marine fuel oil supply ports in the world for the first time.

Xia Wenzhong disclosed that in 2019, the Zhejiang FTA pilot area strives to achieve more than 45 million tons of oil trade throughout the year, and oil trade volume is more than 260 billion yuan; the supply of bonded marine fuel oil has exceeded 4 million tons, accounting for more than 50% of the total settlement; and the storage capacity of oil products has reached 31 million cubic meters.

Breakthrough in "bend over" system

Taking fuel oil as a breakthrough, around the layout of the oil and gas industry chain, the current development of Zhejiang free trade zone has put forward the macro goal of "benchmarking Singapore", and the layout of oil and gas industry is extending to the upstream and downstream industry chain, in an attempt to achieve the "overtaking" of Singapore's "bend".

In twenty-first Century, the economic news reporter learned that, in order to promote the rapid development of the industry, Zhoushan is now accelerating the construction of the headquarters economy of marine fuel oil. The Sino petro Tai Fu bonded oil headquarters, Sinopec global ship oil supply headquarters and the medium and long fuel oil supply headquarters have come down one after another. At the same time, a total of 12 enterprises in Zhoushan have obtained the qualification of bonded fuel oil. In 2018, Xinli Petroleum (Zhoushan) Co., Ltd., the first foreign oil supplier, was also introduced into the port area.

In fact, accelerating the industrial layout is only a solid foundation. The key to Zhejiang's free trade area to catch up with the Singapore port is also to seize the "new starting line" of the development of oil and gas industry in 2020.

According to the New International Convention on the prevention of pollution from ships caused by the International Maritime Organization (IMO) (hereinafter referred to as the "sulfur restriction"), since January 1, 2020, all ocean going ships must reduce the sulfur content in shipping fuel oil from 3.5% to 0.5%.

Reporters learned that this new fuel oil index system for the development of oil and gas industry in Zhejiang free trade zone has brought a new period of development opportunities, but also brought the system still needs to break through the space. On the one hand, the domestic regulation of the new regulations for the regulation of shipping fuel oil has long been strengthened in terms of system setting, production and supply.

On the other hand, under the new standard of international shipping fuel oil, Singapore in the traditional dominant market will be limited by the support of refining and chemical capacity, and may lose its consistent price advantage over the past years.

A head of the Zhejiang Free Trade Zone Management Committee, in an interview with an economic reporter in twenty-first Century, said that the use of low sulfur oil would help reduce pollution and solve the problem of overcapacity in domestic refinery enterprises under the new "sulfur restriction" requirement. At the same time, because of the Limited refining capacity of Singapore's low sulfur oil, the domestic refinery enterprises, if they can enjoy the export of low sulphur oil on the basis of the export tax rebate, will have the price advantage in the international market and attract more international shipping vessels.

"But the key obstacle is that the domestic refineries and enterprises are not willing to produce low sulfur oil, and they can not enjoy the export tax rebate policy from the production of enterprises, which makes the production profit space not ideal." The responsible person told reporters that in the future, Zhoushan port is going to catch up with Singapore's port on bonded fuel oil. In addition to accelerating the industrial layout as the foundation, the most important thing is to break through the export tax rebate policy for low sulfur bonded fuel oil.