Chapter 1329: Hong Kong Petroleum Market
'Mr Xia, in terms of policy, the Hong Kong government has already given these three major industries a lot of support, but in the final analysis, the market players still need to play a supporting role.'
'The Hong Kong government has actively attracted investment, but these major industries are not of interest to foreign giants, and local capital investment is relatively small, so it is difficult to see results.'
'Especially the petrochemical industry, since we in Hong Kong have determined our development strategy, we have been subject to great constraints. All of the competition comes from Star City, and it is difficult for Hong Kong to attract giants to invest in the face of competition from Star City.'
Su Xingjian finished talking about the difficulties and looked helplessly at Xia Yu.
This is how the market economy works. The government can only play a guiding and supporting role. In the final analysis, it all depends on whether or not capital is willing to invest. If capital is unwilling, then it is in a difficult situation.
Of these three industries, the one with the greatest potential is the petrochemical industry, but in the first half of the year, the economic added value was only 1.786 billion Hong Kong dollars, and for the whole year, it was only 3 billion Hong Kong dollars. Apart from some small-scale investments by local capital, it is the contribution of the petrol station market.
It's not that the Hong Kong government isn't working hard, it's just that Star City is so cunning. It uses its already-held market position and advantages to constantly sabotage Hong Kong and make international oil giants give up investing in Hong Kong.
This is to stifle the petrochemical market of Hong Kong in its infancy and avoid future competition.
'Mr Xia, today I have specially brought the report on the development of the petrochemical industry in Star City, which I had specially investigated,'
Su Xingjian said, and handed Xia Yu another document.
Xia Yu didn't say anything, just took the report and read it.
Xia Yu gradually learned about the current situation of the petrochemical industry in Xingcheng.
Xingcheng, which is smaller than Xiangjiang, has almost no mineral or petroleum resources, but it is already a well-known oil refining country in Asia, ranking as the largest oil refining centre in Asia and the third largest in the world, second only to Houston in the United States and Rotterdam in the Netherlands.
The Star City's oil refining industry has become one of the main pillars of Star City's economic success. It currently accounts for 37% of Star City's total industrial output value, and exports of petroleum products account for one-third of Star City's total exports!
It all started more than 20 years ago.
In 1960, Star City had just gained autonomy and was looking for a suitable development path for Star City based on its own situation.
At that time, the Star City government adopted the industrialisation plan designed by the team of Dutch economist Albert Winslow, and developed the petrochemical industry as a pillar industry.
Under the guidance of this industrial plan, Star City introduced the first large multinational oil giants, such as Royal Dutch Shell in 1961, BP in 1964, and Exxon in 1966.
Then in 1973, there was a very crucial step, which was the establishment of Star City Refining Company, jointly invested by Star City Development Bank, BP and Chevron's Caltex Oil Company.
Currently, Star City's refining industry has five refineries, which belong to Star City Shell Oil Company, Star City Exxon Oil Company, Star City Mobil Oil Company, Star City Refining Company and BP.
The five refineries, the highest capacity is Star City Shell Oil Company, with a daily refining capacity of 440,000 barrels, followed by Star City Exxon Mobil Corporation's 225,000 barrels/day, Star City Mobil Oil Company's 200,000 barrels/day, Star City Oil Refining Company's 155,000 barrels/day, and BP's 25,000 barrels/day.
That's a total of 1.045 million barrels per day!
Over the course of a year, that's 380 million barrels per year, which translates into a refining capacity of 53 million tons per year!
Of course, this capacity is the case when operating at full capacity. In reality, the operating rate of the five major refineries in Sing City is about 80%, which is higher than the 50% to 70% in developed countries in Europe and the United States.
Currently, the daily refining capacity is about 844,000 barrels, of which 174,000 barrels are consumed domestically, 340,000 barrels are exported, and 330,000 barrels are processed on behalf of Indonesia, Malaysia, Bangladesh and other oil traders.
Among the 340,000 barrels exported, the largest market is the island countries, which absorb 22% of exports.
Next is Hong Kong, which absorbs 18% of exports, about 62,000 barrels per day!
Even under the current circumstances, Hong Kong imports more than 3 million tons of oil from Star City every year.
Hong Kong's current oil consumption averages 138,000 barrels per day, and it is estimated that the annual total will reach 7 million tons, which is basically dependent on imports!
Therefore, Star City's oil exports to Hong Kong account for nearly half of Hong Kong's oil imports!
...
'So, last year, Hong Kong's oil imports were probably around 2 billion U.S. dollars?'
After reading the information, Xia Yu's mind flashed with the international crude oil price and the local gasoline price in Hong Kong. Combining this with last year's local oil consumption in Hong Kong, he calculated an answer.
'Yes, it's in that range!'
Su Xingjian nodded.
Two billion U.S. dollars is no small sum, and it's equivalent to 12.3 billion Hong Kong dollars.
If a local Hong Kong oil refining company could take over this entire market, and based on a gross profit margin of 30% to 40%,
that means the gross profit will reach 3.69 billion to 4.92 billion Hong Kong dollars!
So the net profit will be at least 2 billion Hong Kong dollars!
The local oil market in Hong Kong is enough to support an oil refining company with a market value of more than 20 billion Hong Kong dollars. This is just the oil refining sector, not including the retail market.
And with Hong Kong's geographical advantage, at the junction of the Pacific Ocean and the Indian Ocean, its geographical advantage is actually equivalent to that of Star City.
Most importantly, Hong Kong is even closer to the Southeast Peninsula, and it is also closer to the island country and Taiwan Province. It also has the potential future of the mainland behind it. The development potential of Hong Kong's petrochemical industry is even higher than that of Star City!
While Star City has held the throne of the world's three major refining centres for generations, Xiangjiang is also well-positioned to compete.
As Xia Yu knows, of the world's top ten refineries, five are in Asia, excluding the Middle East, with South Korea alone accounting for three.
This proves that the Asian refining market is still in the growth market, and there is still plenty of room for market competition.
Although Hong Kong is currently in a weak position, there is still time and room for it to catch up.
However, due to the influence of Star City, it is currently difficult to attract international oil giants to invest in Hong Kong.
There are many powerful local tycoons in Hong Kong who are capable of investing in oil refineries, but they are suffering from a lack of technology and experience, as well as the risk of intense competition.
As expected, in critical moments, he is still the one to rely on!
His Pacific Oil Company had just acquired the refining business of Gulf Oil in Northern and Western Europe, and after nearly half a year of integration, it had already stabilised.
Afterwards, Xia Yu and Su Xingjian talked about the situation of the big health industry and the tourism and entertainment industry. He had a general idea in mind, but he still needed to learn more and make a judgment.
...
'Governor Su, I understand. I will solve the development difficulties encountered by these three industries.'
'I just need policy support from the Hong Kong government at that time. I will have someone contact you directly.'
Xia Yu took a sip of tea, smiled faintly, and took full responsibility for the matter.
Su Xingjian immediately felt relieved, and said with a smile, 'No problem, as long as I am still in Hong Kong for one day, the Governor of Hong Kong will be able to fully assist.'
'Mr Xia, then I will not disturb you anymore, I have some things to do when I get back.'
'Okay.'
'Jianning, see Governor Su out for me.'
'Okay, Chairman.'