Technological advances in China

China

TOGY talks to James Gao, managing director of Beijing Sino-Sphere Petrochemical Technologies, about new technologies that are having a large impact on the downstream sector, working in China compared to other countries and different methods being used to generate cleaner fuels. The company provides research and development services in oil refining, chemical process technologies and catalysts. 

Beijing Sino-Sphere Petrochemical Technologies provides research and development services, and manufactures auxiliary equipment for the technologies it has on offer. The range of products Beijing Sino-Sphere Petrochemical Technologies provides include low temperature isomerisation, naphtha hydro-aromatisation, and isomerisation process technologies. The company also offers licensing, consulting and technical services for the refining and petrochemicals industry in China.

• On China’s downstream sector: “In China, the downstream market is not very open. It is only in the past few years that the refining industry was opened up to private capital. After the refining companies were opened to private capital, EPC companies followed suit. These companies are not very big in scale and their technology is not very advanced. These are shortages in the Chinese oil and gas industry.”

• On teapot refineries: “In China there is a strange phenomenon, one-fifth of the country’s refining capacity belongs to teapot refineries, and the scale of these refineries is small. A certain percentage of these teapot refineries do not use crude oil in the traditional sense. Instead, they use naphtha to refine. The source of the naphtha is mixed.”

• On clean energy: “When we talk about clean energy, we do not talk about new or renewable energy, but instead, an upgrade of petroleum energy. For the petrol itself, the composition is a little bit different in Europe and North America. The percentage of isomerized oil and alkylated oil take up a higher percentage in the petrol in North America relative to China. Reaching a higher percentage of these two elements could be done through improved production technology.”

Besides touching on these topics, TOGY talked at length to James Gao about new technologies that are having a large impact on the downstream sector, working in China compared to other countries and different methods used to generate cleaner fuels. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with James Gao underneath.

Can you give us a brief overview of the petrochemicals sector in China?
In China, the downstream market is not very open. It is only in the past few years that the refining industry was opened up to private capital. After the refining companies were opened to private capital, EPC companies followed suit. These companies are not very big in scale and their technology is not very advanced. In general China’s refining capacity is very huge, however, very few private technological suppliers are active in this industry. That is why we are doing our work in this area.
Among the private players, there are very few companies that are technology experts. We are one of very few private technological companies. I am confident that our technology is some of the very best.

Can you tell us about some of your recent technological achievements?
To start with, our company was registered in May of 2015, so it is a new enterprise. However, before this official registration, we were preparing ourselves for this industry. We were a trading company to start with. As a trading company, we were order driven. Our goal was to obtain as many orders as possible. We then switched to technological research.
The technologies that we have launched are quite influential in our industry because the technologies were monopolised by Honeywell UOP and Axens. Low-temperature C5/C6 isomerisation was monopolised by the Honeywell UOP and Axens in China. However, we are very confident and proud that we have successfully developed our own process technology.
GTC and RIPP also have low-temperature C5/C6 isomerisation. However, their product requires temperatures of 180-190 degrees Celsius. For Honeywell UOP, Axens and us, it requires only 120 degrees Celsius. The 60-70 degrees make a huge difference in an industrial operation because, in order to reach isomerisation at 120 degrees, the industrial surplus heat could be harnessed to make the catalyst work. However, if you require 180-190 degrees, you need to produce more heat and use more energy.
In China there is a strange phenomenon; one-fifth of the country’s refining capacity belongs to teapot refineries. And the scale of these refineries is small. A certain percentage of these teapot refineries do not use crude oil in the traditional sense. Instead, they use naphtha to refine. The source of the naphtha is mixed.
The first source is condensed crude oil from oilfields. The second is condensate oil produced by coal-to-oil processes. The third and most common source for these teapot refineries are the big three NOCs [CNOOC, Sinopec, CNPC]. Naphtha produced as such cannot be sold as petrol. It must undergo further treatment. That is why the teapot refineries pay a lot of attention to the ways of refining naphtha and how to make the most profit.
The core value of our technology is to process light and heavy naphtha separately. Light naphtha undergoes isomerisation and heavy naphtha undergoes reforming or aromatisation. By doing so, we can elevate the quality of the product to match the national vehicle standards, such as Chinese level 5 and level 6. Those levels of Chinese standards are similar to European standards.
Another technology breakthrough we made is our high level dehydrogenation. Lummus, UOP, and TKIS are the main players in this field. These companies have different dehydrogenation processes. We have been making efforts to commercialise of our technology to bring the economic benefits to our customers.
The government has a lot of control over the refining industry, but relatively less over the chemical industry. If smaller refineries could get access to our dehydrogenation technology, which could be assigned to the chemical category, they could have more room to play.
Another technology I would like to mention is continuous reforming catalysts. For a long time, only UOP, Axens and RIPP could manufacture this type of catalyst. Now we’ve become able to manufacture and supply continuous reforming catalysts.
We have sold more than two hundred tonnes of this catalyst in the Mideast. This shows our catalyst R&D and manufacture capabilities. Internationally, for big refineries the continuous reforming units and isomerisation units often go hand in hand. This capability gives us new opportunities to work with big refineries and their designers. We can provide the continuous reforming catalyst and the isomerisation technology, which gives us a lot of room to promote our business.

As a Chinese company, how do you differentiate from others in the catalyst market?
As a Chinese enterprise our advantage is that we are from this market and have all of the advantages of a product made in China.
For the international market, there is a policy to give favourable treatment to manufacturing companies in China, which export their products outside China, with raw materials coming from overseas. The government gives tax incentive to this type of business. This policy increases our competitive advantage in the international market.
Additionally, when Chinese EPC companies go abroad, they are limited by other countries’ labour policies, which makes these companies less and less influential in the market. Perhaps Chinese technology companies like us will become more active and influential in the world market.

Is your company looking to expand into other international markets?
For the next 1-2 years, we are going to focus on China. We do have project leads in Bangladesh, Thailand, and Singapore. But our main goals will be in China. At the same time, we will have a bit of reserve for the future to expand our business into the international market.

Who are your major clients in China?
For the domestic market, we have co-operation with Yanchang Petroleum Group. They have their own refining capacities, so we are trying to get our technology adopted by them. There are in-depth discussions and initial project leads for our technologies and catalysts to be applied in the big three oil companies. At the end of the day, they are the dominant players in the national refining system.
Besides, there are other refining players in China, such as Sinochem, ChemChina and so on. They have their own refining capacities or they have dominant shares in other refineries.
We are hoping that our technology could become a mainstream technology in the Chinese refining market. However, in order to achieve that we have to go step by step.

Will the move towards clean energy benefit your current market share?
When we talk about clean energy, we do not talk about new or renewable energy, but instead, an upgrade of petroleum energy. For the petrol itself, the composition is a little bit different in Europe and North America. The percentage of isomerised oil and alkylated oil take is higher in the petrol in North America relative to China.
Reaching a higher percentage of these two elements could be done through improved production technology. Further reducing sulphur, nitrogen and olefins in petrol require new technologies. The isomerised oil and alkylated oil account for nearly 30% of the petrol in Europe and North America. In China, the percentage is still in the single digit. To have better petrol, the existing refineries have to be revamped and the above-mentioned technologies are necessary. This is why we think the direction our company is going in China is very prosperous.

For more information on Beijing Sino-Sphere Petrochemical Technologies, and China’s oil and gas industry, see our business intelligence platform TOGYiN. TOGYiN features profiles on companies and institutions active in China’s oil and gas industry and provides access to all our coverage and content, including our interviews with key players and industry leaders. TOGYiN currently covers 31 markets worldwide.