MOSCOW (MRC) -- China's Shandong province has ordered its refineries, including three plants under state-run Sinochem Holdings, to self-inspect and self-rectify any irregular fuel tax practices, a document reviewed by Reuters on Thursday showed.
The move is part of a national clamp-down on smaller and mostly independently run refineries related to crude oil import quota usage and tax payments, as Beijing works to consolidate its bloated industry.
The plants were asked to complete a self-check and come up with rectification plans within five days from Nov. 15, the document, issued by the provincial government of Shandong, said.
The provincial government of Shandong, which is home to some 60 independent refineries, did not immediately respond to a request seeking comment.
Sinochem did not immediately respond to an email request for comment.
Shandong authorities did not elaborate in the document on how many refineries are included in this round of inspections, but stated that plants should reveal all relevant irregular tax issues dating back to January 2019.
"In the case of failing to submit factual reports on time, the highest degree of punishment will be applied and relevant individuals will be held responsible according to relevant laws," the document said.
A special audit team has been dispatched to three Sinochem plants, according to the document, without naming the plants or giving any details of their tax situation.
Two industry sources suggested that Changyi refinery, Huaxing refinery and Zhenghe refinery, with a combined annual primary crude oil processing capacity of 20 MM tons (400,000 bpd), might be among those under scrutiny. The three plants are under China National Chemical Company, or ChemChina, which was merged earlier this year with state-run Sinochem Group to form a new entity called Sinochem Holdings.
As MRC informed before, in February, 2020, ChemChina annnounced plans to invest CNY50 billion in the construction of a cracking unit in Dongying, Shandong Province. If approved by the government, ChemChina will build its first cracker.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
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