Producing a "New Name Card" for the Belt and Road Capacity Cooperation

By Chen Heng and Zhang Yi, Guangming Daily

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Producing a "New Name Card" for the Belt and Road Capacity Cooperation

By Chen Heng and Zhang Yi, Guangming Daily

One side is Europe, and the other side is Asia. Atyrau, across the Ural River, is destined to be a convergent city. One thousand years ago, this place was an important station of the ancient Silk Road. To this day, there are still legends passing down on the land about the Silk Road.

About one thousand years later, it is here in the world's largest inland country that President Xi Jinping proposed the Belt and Road construction. Policy connectivity, road connectivity, trade connectivity, currency connectivity, peoples-to-people connectivity ... have awakened the dust-covered memory of the city's "Silk Road".

I. A team from China has helped this oil-rich country to end the history of high standard gasoline depending on import

In 1984, when Kenkim graduated from Kazakhstan, he was confronted with a country without an independent oil industry.

But 33 years later, the then young man has grown up to be the first deputy director of the Atyrau oil refinery. And under his command is the largest refinery on this 2.72 million square kilometers land.

Kazakhstan has rich oil resources, but a large amount of oil products is imported for a long time, mainly due to its serious shortage of domestic oil refining capacity. Built in 1945, Atyrau Refinery, with an annual processing capacity of 4.3 million tons, is the largest refinery in Kazakhstan. However, with technology and equipment very outdated, the refinery not only produced product with poor quality, but also a single product, and was once on the verge of bankruptcy.

Since the year 2009, according to the needs of Kazakhstan innovation planning and refinery modernization, Atyrau refinery has implemented two modernization upgrade projects -- the aromatics project and oil in-depth processing project. The two projects were completed by the Sinopec Luoyang Engineering Co., Ltd. (Sinopec SEG, a wholly owned subsidiary engineering group of Sinopec), in accordance with the EPCC “turn-key project” contract mode, with a total investment of US$ 2.72 billion.

The Atyrau refinery is the first large petrochemical project built in 22 years in Kazakhstan since its founding, which will be renovated and upgraded. Atyrau refinery director Arman Turlin said, before signing the contract, we went to visit Chinese refineries, which confirmed that China could build and design equipments in line with the world's advanced level. After the completed transformation, Atyrau refinery can reach the advanced level in the world.

At present, the aromatics project is completed and put into production in December 2015, is the only aromatic device in Kazakhstan, having greatly eased the Kazakhstan domestic oil supply shortage, and dependence on imports, created a Kazakhstan history of manufacturing oil products in line with international environmental standards and high quality.

The oil deep-processing project is composed of 60 units including a 2.4 million tons / year catalytic cracking device. After completion of the project, oil deep-processing can reach 85%, gasoline and diesel products meeting the Euro IV and Euro V emission standards could be produced, will effectively reduce the dependence on import of Kazakhstan high standard oil, consistent with the Kazakhstan strategic development priorities, and will further promote industrial upgrading of the Kazakhstan petrochemical industry.

Currently, under the promotion of aromatics project and oil deep processing project of SEG Atyrau Refinery, SEG Kazakhstan branch ranks third in the amount of tax payment in Atyrau, and has paid taxes in Kazakhstan for about US$180 million in accumulation term. Meantime, SEG and several Kazakhstan equipment manufacturers, steel structure manufacturers, material suppliers have reached and signed cooperation projects worth more than US$300 million in total, having promoted the establishment of high quality manufacturers and suppliers resources in Kazakhstan and the CIS at large; used subcontractors more than 200, and created the accumulated jobs of more than 6700, and enriched the local employment.

The Belt and Road Initiative has actively promoted international capacity cooperation and manufacturing cooperation by advancing information and infrastructure connectivity and interoperability, extensively establishing cooperation mechanisms, improving service system and guiding industrial sectors to cooperate with mutual benefits, thus, has yielded fruitful outcomes. From the year 2013 to 2016, Chinese enterprises invested more than US$60 billion in countries along the routes; and by the end of 2016, established 56 economic-trade cooperation areas with countries concerned along the routes.

II. Overseas projects progressing in difficulties, but upgrading the enterprise's international ability

In retrospect, the first large-scale refinery project contracted by SEG company in Central Asia -- Atyrau Refinery was not smooth-going at the early stage of the project.

Deputy general manager of SEG Kazakhstan branch, Atyrau former deputy governor Gerdous told reporters that at the beginning of the project construction, the government did not have confidence in various aspects of the huge project by the Chinese enterprises concerning technology, laws, taxation, labor, etc.. The difficulties are reflected not only in the confidence of capability, but also in the standard, technology, personnel and policy for engineering design and construction.

For example, for the underground pipeline, Huang Xin, deputy general manager of Sinopec Luoyang Engineering Co., Ltd., said that Kazakhstan standards mostly adopted Russian standards, which had similarities with European standards, but also had some obvious differences. If we adopt the international standards other than that of Kazakhstan, we need to make standards comparison with that of Kazakhstan and submit them to the relevant departments of the Kazakhstan government for approval. What is more, in order to meet the needs of transnational procurement for the project, the design and procurement have also adopted a large number of international standards, European and American general standards."

In the face of a various standards in existence, the project team first organized task teams specially responsible for the Kazakhstan standards and Russian standards collection and translation, and teams responsible for project technology, piping, equipments, electrics, and engineering and make the project detailed design in strict accordance with the Kazakhstan standards requirements.

Although we encountered various problems, yet, due to various efforts, Atyrau refinery aromatics project is built the fastest in Kazakhstan petrochemical projects, the construction process is faster than other two refining projects, thus, has won the owners satisfaction. Zheng Fuqiang, general manager of SEG Kazakhstan branch and aromatics project manager of Sinopec Luoyang Engineering Co., Ltd. said that it is not easy, but through our efforts from up to down, we have won recognition by our partners and built our business card for "going global".

When the owner's confidence in the Chinese team is gradually increasing, the company's popularity and market respect are also gradually increasing. Huang Xin said that after we have experienced many projects, we would accumulate a data system in all respects, and we would have plans to deal with difficulties that will be encountered in the future." The number of oil deep-processing projects is 1.5 times that of aromatics projects, but the project construction time has been shortening. This is the upgrade of international ability. "

III. Promoting international capacity cooperation to drive export of China's equipments and materials

The process of building a refinery is so difficult that it is not the business of the Chinese side after handing the "key", is it? Facing the reporter's question, Zheng Fuqiang shows a long-term consideration: this project not only promotes the development of local economy, but also drives the export of China's equipments in set and materials worth more than US$600 million, and creates the new "business card" for China's refining technology.

In fact, Atyrau refinery project helps realize export of China petrochemical engineering design technology for the first time to Central Asian market, and provides the opportunity for the petrochemical engineering technology to build a new "national name card".

In the process of "going global", the project team is also responsible to introduce to the project owners its approved construction enterprises, equipment manufacturers, suppliers and others, so as to undertake the social responsibility to bring the entire national industrial sectors "going global".

In the process of implementing the project construction, the SEG Kazakhstan Branch maximizes the adoption of the national standards and industrial standards of China, and maximizes the use of China’s materials. Under the premise of compliance with the contract, all important equipment items are procured in the Chinese shops, accounting for about 52% of the total investment, which provides opportunities for China’s 40 qualified suppliers and manufacturers to export to Central Asia, and successfully enter its market and won a reputation for “Made in China” .

Zheng Dongfeng, director of the International Business Department of Sinopec Luoyang Engineering Corp. Ltd, said, with the Belt and Road construction pushed forward, in a period of time to come, the large state-owned enterprises or private enterprises will increase outbound investment. Therefore, we need to strengthen the cooperation with domestic private enterprises and the construction of information channels so as to jointly realize the Chinese enterprises to go global.

In addition to the refinery project, the Sinopec group had entered the oil and gas exploration and development field in Kazakhstan as early as in the year 2004. Kazakhstan Company of the International Petroleum Exploration and Development Co. Ltd. is one of the earliest overseas projects of Sinopec "going global". Currently, the Kazakhstan company International has two branches, FIOC and CIR, with 5 self-run companies and 4 joint ventures. Here, Sinopec has harvested "the first barrel of crude oil" overseas.

Zhang Wei, Chinese Consul General in Almaty, said that Kazakhstan is the strongest country in Central Asia, has abundant natural resources, but with single economic structure. After China-proposed the Belt and Road Initiative, Kazakhstan also proposed new economic policy such as a "Bright Road" to echo with the Chinese proposal, hoping to share with the Chinese Belt and Road Initiative bonus, and promote the transformation of its national energy industry.

IV. Exchanges between nations depend on amity among their peoples, the common participants in building a new Silk Road

The government of Kazakhstan stipulates that the introduction of 1 Chinese worker must be accompanied by employing 9 local workers. For every 3 Chinese managers visas, 7 local managers must be employed. And there are few technical personnel in the locality that meet the qualifications of employment, which for a time left construction of the project in trouble.

"Aromatics project of Atyrau Refinery project is so big that there should be about 2000 workers working on the construction site, but 3 years ago at the start the construction site only saw about 100 people working, Zheng Fuqiang.

"At the beginning, we only have confidence in the employees we bring from home. But with the deepening cooperation, we turn passive into initiative, employ and train a large number of local staff, which enhances their trust in us, Zheng Fuqiang said that the company currently has 1197 Chinese employees and 2131 Kazakhstan employees; locals are employed for many key positions, etc. which has also helped Chinese enterprises to take root locally.

Exchanges between nations depend on amity among their peoples, amity among peoples relies on people-to-people connectivity. Aribick, deputy manager of SZK company of the Kazakhstan Exploration International, said that many Chinese colleagues in Kazakhstan can speak Russian fluently, which makes me feel good and feel that there is no difference between us, and we are among ourselves. The Kazakhstan subsidiary companies focus employment on the local people, Chinese employees are only 65, the local employment proportion is over 90%, having provided 2666 jobs for the local community, the accumulative training expenditure was about US$8.98 million; having trained local staff totaled 18710 persons in Kazakhstan.

During a visit to the Daqing oil field, engineer Dulatt of the SZK subsidiary of Kazakhstan company, was deeply moved. "I’d rather shorten life by 20 years in order to win Daqing oil fields"; "to work with conditions available, work without conditions available because we should create conditions for ourselves"; "our work must stand the tests by our younger generations to come", these slogans are often on his ears. Returning home, he often told his colleagues about the unusual trip to Daqing. Taking Wang Jinxi as a role model, he works conscientiously in his post.

Algalin, deputy general manager of Foreign Affairs Department of SEG Kazakhstan branch, and having studied at Renmin University of China, told reporters that now young people in Kazakhstan find it fashionable to study in China. In Kazakhstan, Chinese is the third major foreign language in addition to Russian and English; this place is the path for the ancient Silk Road in the past, now we have become participants in the new Silk Road.

Reflecting by flow of the Ural River, the Millennium space and time witness intersection convergence here. Atyrau - the ancient city bridging Europe and Asia, the New Silk Road just writes down its first page of the story ...

(Excerpts of the article in Guangming Daily, October 24, 2017, p.15 )