Singapore — Sinopec, the world's biggest refinery by capacity, plans to leverage its hydrogen business to meet carbon neutrality by 2050, ahead of China's 2060 target, company Chairman Zhang Yuzhuo said March 29.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
"We set hydrogen as the main direction for the company's new energy development," Zhang said during the company's 2020 results briefing and added that Sinopec targets to be China's top hydrogen supplier.
Zhang said production, storage and distribution are the key elements in the hydrogen value chain, while Sinopec has already had remarkable strength in production and distribution.
"We have been producing hydrogen for our refining and petrochemical complexes, while we have the biggest retail network in China," Zhang said.
Currently, Sinopec's hydrogen production capacity is 3.5 million mt/year, accounting 14% of China's hydrogen output, Sinopec reported on its WeChat platform on March 29. Sinopec has a refining capacity of 305.5 million mt/year (6.15 million b/d).
Zhang said they target to produce blue hydrogen as transformation fuel from the current grey hydrogen generated for refining and petrochemical production, and eventually supply green hydrogen that generated from renewables.
Blue hydrogen is the hydrogen that meets the low-carbon threshold but is generated using non-renewable energy sources, while grey hydrogen is produced using fossil fuels.
Meanwhile, Sinopec targets to build 100 hydrogen fueling stations in 2021 in China, and lift the number to 1,000 during 14th five-year plan over 2021-2025, Zhang said.
The company had 27 hydrogen fueling pilot projects by the end of 2020. In comparison, it has 30,713 branded oil fueling stations in China.
In comparison, PetroChina has also set a target to meet "near zero" carbon emissions by around 2050, ahead of China's 2060 target. But as an upstream oil giant, PetroChina relies more on the wind, solar and geothermal resources within its mineral rights, S&P Global Platts reported earlier.
However, Zhang did not give more detail about the company's investment plan in new energy development, despite Sinopec boosted its capital expenditure by 23.8% year on year to Yuan 167.2 billion ($25.51 billion) for 2021.
Article continues below
Gas in focus
Zhang said the company will emphasize its natural gas business to achieve leapfrog development through the whole industry chain.
"We will further increase our natural gas production, and targets to produce 34 Bcm, 38 Bcm and 42 Bcm of natural gas in the coming three years [starting from 2021], respectively, with an annual growth rate of more than 10%," Sinopec's president Ma Yongsheng said during the results briefing.
About 40% or Yuan 66.8 billion of the budget was set to go to upstream, with the amount jumping 18.4% year on year, the company report showed.
Sinopec is China's second gas producer, contributing 30.37 Bcm or about 16% of China's total gas production in 2020, up 2.3% year on year.
The top gas producer, PetroChina produced 113.09 Bcm of natural gas in China, up 9.9% on the year, Platts reported earlier. It planned to lift gas output by 3.2% in 2021.
Ma attributed Sinopec's growing natural gas output to shale gas fields last year, with yield from Weirong, Fuling and Nanchuan shale gas fields recording a year-on-year growth of 480 Mcm, 370 Mcm and 290 Mcm, respectively.
Besides, Sinopec's Dongsheng gas field, Daniudi gas field and Shunbei oil and gas field all saw an increase in natural gas production in 2020, up 290 Mcm, 320 Mcm and 110 Mcm year on year, respectively, offsetting the output decline from Puguang and Yuanba gas fields due to COVID-19 and geologic hazard impact, according to Ma.
Sinopec's refining, chemical output
Sinopec raised its crude throughput and oil product output in 2021 amid demand recovery for transportation fuel, but chemical is the company's strategic business in the future with heavier investment.
Crude throughput target in 2021 was set at 250 million mt or 5.03 million b/d, up 5.5% year on year, according to CFO Shou Donghua.
The targeted volume is also 0.6% higher than crude throughput of 248.52 million mt in 2019 due to the startup of the greenfield 10 million mt/year Zhongke Petrochemical in southern China Zhanjiang city.
Meanwhile, it also raised the oil product output yield to 61.2% of its planned throughput in 2021 from 59.7% in last year, indicating slightly lower petrochemical production yield.
Yu Baocai, senior vice president of the company, expected competition in chemical market would become more and more intense in the second half of the year due to new petrochemical capacity online.
In the longer term, however, Sinopec aims to put more effort into producing high-value-added petrochemical materials as the company's strategic business.
It plans to significantly hike the budget for chemical sector by 85.5% to Yuan 48.6 billion ($7.42 billion) in 2021 to account 29% of its total capital expenditure.
This is a record high budget for the chemical sector. In comparison, the company spent Yuan 26.2 billion in the sector in 2020 and account for 19% of the total expense.
Sinopec's 2021 operation targets
*Oil, gas outputs from both domestic and overseas
Source: Company report
Sinopec's domestic production (million mt)
^share in China
YoY vol Change
* conversion factor: 1 cubic meter = 35.31 cubic feet
** conversion factor: 1 mt = 7.10 barrels
^ Divide Sinopec's output by China's total production
^^ conversion factor: 1 mt = 7.35 barrels
Source: Company report, the National Bureau of Statistics
Sinopec's oil product sales ( million mt)
Source: Company report