NEWS > Business
US$10b national petro game blueprint unveiled
2007-07-28 03:14:04 Shanghai Daily

SHANGHAI, July 28 -- CHINA plans to limit the imports of large-scale petrochemical equipment used in oil refineries and other facilities.

The plans is to boost the domestic equipment-making industry and potentially create a US$10 billion market for home manufacturers.

The nation's industry planner, the National Development and Reform Commission, aims to have 75 percent of the country's petrochemical equipment locally made by 2010, according to a draft proposal.

The NDRC has sent the draft to major state petrochemical companies, including the China National Petroleum Corp and the China Petrochemical Corp, to seek their opinions.

According to a Shanghai Securities News report, which cited an unnamed CNPC official, China invests 300 billion yuan (US$39.7 billion) in its petrochemical industry per year and about a third of it will be spent on equipment procurement.

This indicates the government's 75 percent localization requirement will create a market worth at least 75 billion yuan a year for domestic equipment makers.

It's unclear what the current equipment localization rate is for the domestic petrochemical industry. Industry officials said China is able to design and manufacture much of its needs, although it has to rely on foreign support in some extra large-scale facilities and specialized equipment.

At present, the equipment localization degree in domestic oil refineries has exceeded 90 percent and of that the 300,000 tons a year of ethylene cracker accounts for more than 80 percent, according to the Shanghai Securities News.

The proposal asks developers to submit a procurement list when starting new petrochemical projects.

It plans to bar imports of equipment that can be domestically made and marketed, and limits imports of equipment which can be locally produced but is not yet commercialized by levying an import tax.

For example, the NDRC proposes to ban imports of hydrogenation reactors with an annual capacity of 800,000 tons to two million tons, and limit overseas purchases of cracking-gas compressors of one million tons in capacity.

Analysts say the government initiative will benefit leading domestic petrochemical equipment makers including Dalian Rubber & Plastics Machinery Co and Shenyang Blower Works (Group) Co.

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