Oligopoly makes oil refining a “lose money”

According to Xinhua Viewpoint, the three-quarter performance report released by China National Petroleum Corporation (CNPC) and Sinopec Corp. (Shenzhen) shows that in the first three quarters of this year, the net profit of the two major oil companies exceeded RMB 160 billion, but the refining business continued to emerge. Huge loss, a total loss of 64.639 billion yuan. However, a "strange phenomenon" is that while petrochemical double-hung oil giants suffer huge losses, at the same time, many local oil-refining companies are not worried about losses, but are oil-free.

According to the explanation of relevant person in charge of PetroChina, this year the government implemented a control over refined oil prices in order to ease inflationary pressures. Therefore, China's refined oil prices did not fully reflect the rise in international oil prices earlier this year. This is a result of PetroChina's refining sector this year. The important reason for the huge loss. Sinopec attributed the reason to "the cost of crude oil from refineries to the factory is relatively high." It is undeniable that crude oil prices and policy factors do have some pressure on the refining business. However, the average price of crude oil for the first three quarters of the “two barrels of oil” should be said to remain in the vicinity of the domestic company’s refining breakeven point. Moreover, the operations of the two major oil giants have covered the entire oil industry chain and are fully capable of regulating the profit of each sector through upstream and downstream integration. Even if the adjustment of refined oil prices is not in place, there will not be such a huge loss.

At the same time, according to the results report, PetroChina and Sinopec had a loss of 23.4 billion yuan and 12.2 billion yuan respectively in the oil refining business in the first half of the year. In the first three quarters, the loss of refining business increased significantly to 41.5 billion yuan and 23.1 billion yuan. In other words, in the third quarter, the "two barrels of oil" lost 18.1 billion yuan and 10.9 billion yuan in refining business, respectively, but the international market began to fall rapidly in August, and the National Development and Reform Commission lowered the domestic refined oil prices only in October. In the context of falling costs and unchanged terminal sales prices, the third-quarter loss was almost close to the overall loss in the first half of the year. Moreover, at the same time as the oil refining business suffered a huge loss, the oil exploration and production Segment still created huge profits for the “two barrels of oil.” For example, PetroChina achieved operating profit of 160.8 billion yuan in the first three quarters, an increase of 40% compared to the same period of last year. . It is puzzling that the gross profit of CNPC's sales segment has been approaching RMB 1,000/t for a long period of time. This has led to doubts as to whether there is any misalignment in profit transfer.

In recent years, about "two barrels of oil"

At the same time of earning a good salary, the news that the government has to subsidize the company due to losses in the oil refining business has often been reported to the newspapers. The “two barrels of oil” once again exposed a huge loss of more than 60 billion yuan in refining oil, perhaps again. It's a trick. According to statistics from the National Association of Industry and Commerce's Petroleum Chamber of Commerce, at present, there are approximately 130 million tons of refining capacity in local refineries, but only about 40 million tons of oil are refined annually, and nearly 90 million tons of production capacity is wasted. If the oil refining business really loses money, why are local refineries squinting at it as a "sweet potato," and why are petrochemical giants unwilling to allow private capital to take over this "hot potato"?

The author believes that oligopoly is undoubtedly the root cause of the frequent occurrence of strange phenomenon in the oil industry. Although the National Development and Reform Commission continuously requested several oil giants such as PetroChina to play an internal and external interest adjustment mechanism in oil companies and balance the interests of various internal plates and ease the difficulties of oil refining companies, we are still regretfully seeing that the market competition mechanism is almost lost. Oil shortages caused by human factors frequently occur in various places. The author believes that although it is unrealistic to completely liberalize the oil industry as an important industry, it is necessary to break the oligopoly and properly introduce competition mechanisms. The state has successively issued "non-public 36 articles" and "new 36 articles". It is hoped that the decision-making level can further help and support private capital to enter the energy field to form a multi-level oil supply processing system.