Petrochemical industry grows in international engineering contracting

On April 25th, the General Contracting and Project Management Development Forum jointly organized by China Survey and Design Association and China International Engineering Consulting Association was successfully held in Beijing. At this forum, 18 overseas companies that have developed outstanding results introduced their experience in exploring the international market. Among them, the engineering and contracting companies in the petroleum and chemical industries accounted for six.
Since 1979, project contracting companies in the petroleum and chemical industries in China have begun to use the experience of international specialized engineering companies to reform their design systems, procedures, and methods, and gradually transform their single-function design institutes into international engineering companies. Up to now, China's petroleum and chemical industry engineering survey and design enterprises have reached 313.
What did these people who used to be on the domestic construction site to learn and play in the international market have learned?

Increased project financing capacity

Financing is the first step in entering the international market and is also a crucial step. The financing capability of an enterprise is one of the important factors for the success or failure of the international market competition.
In 2001, Pakistan's refined oil pipeline project was launched for international bidding. The project is a large turnkey project integrating design, procurement, construction, commissioning and training. With a total length of 783 kilometers, the pipeline is mainly used for transporting refined oil such as diesel oil. The designed annual transmission capacity is 12 million tons. The project adopts international standards and the total contract price is about 370 million U.S. dollars. At the time of bidding, the project owner clearly stated in the bidding documents that the contractor must provide 100% financing for the foreign exchange portion of the project, and use the export seller's credit as much as possible, and the deficiency should be supplemented by commercial credit.
China Petroleum Engineering Construction Corporation (CNPC) participated in the tender. Through the strong support and active coordination of the competent authorities, the company sought to provide China Export and Import Bank with an export seller’s credit amounting to approximately US$100 million for the project, adding one of the heaviest weights to the project’s final bid. After several rounds of hard negotiations, it finally signed an agreement with the project owner to provide 102 million U.S. dollars of export credit lines, and signed an export credit withdrawing agreement of 800 million yuan with the China Export-Import Bank.
In light of the fact that the project has a large scale of financing, a long turnover period (10 years), and a high capital risk, PetroChina Engineering Corporation adopted a series of effective control measures in the implementation of the financing plan to ensure the effectiveness of financing. On the one hand, the owner is required to provide the full payment guarantee issued by the National Bank of Pakistan, and the Central Bank of Pakistan allows the owner to use the foreign exchange to pay the principal and interest fees and the approval of the full guarantee; on the other hand, he is also insured by the China Export Credit Insurance Corporation. Long-term export credit insurance, the maximum amount of claims can reach 90%. Sinopec Engineering Company also obtained better financing conditions through negotiations and forecasted and analyzed the exchange rate risks in international procurement, subcontracting and payment. The various countermeasures have been fully reflected in commercial quotations.
On November 18th, 2004, Pakistan's refined oil pipeline project was completed on schedule. There was no leakage of 85,000 welding lines on 783 km of pipelines. The main process equipment and control system were operating normally and achieved a successful operation. The success of this project has given PetroChina Engineering Corporation good reputation and created market radiation effects. Following this project, PetroChina Engineering Corporation has successively won a series of foreign projects.

Increased ability to resolve risks

China Wuhuan Technology Co., Ltd. (abbreviated as Wuhuan, formerly the Fourth Design Institute of the Ministry of Chemical Industry) is the first domestic pilot unit to implement general contracting of projects. On May 6, 2008, Wuhuan Co., Ltd. obtained a contract for the Jintao Chemical Fertilizer General Contracting Project of Vietnam National Oil and Gas Company through an international open bid. The project adopts the ammonia synthesis method of natural gas, with an annual output of 400,000 tons of synthetic ammonia and 800,000 tons of large-particle urea, with a contractual amount of 570 million US dollars and a total construction period of 43 months. This is the largest chemical plant general contracting project undertaken by Wuhuan and the Chinese engineering company abroad. The company has carried out such analysis on the risk of the project:
Political risk. In general, Vietnam’s internal political situation and society are relatively stable. The Vietnamese government is improving its legal and regulatory systems, implementing a series of foreign investment incentive policies and supporting foreign direct investment. In addition, the location of Vietnam Jinyu Fertilizer Project is the hometown of Vietnamese Prime Minister Nguyen Tan Dung, and the owner is also the most powerful state-owned enterprise in Vietnam, and it is well-funded. Therefore, the political risk of the project is relatively low.
Policy risk. In order to reduce the impact of the global financial crisis, Wuhuan obtained policy risk guarantees for overseas investment from Chinese government agencies, attracted international multilateral organizations such as the World Bank to participate in project investment, and sought the Vietnamese government’s written commitment to bear the risk of legal changes and reduce the policy risks to lowest point.
currency risk. During the construction of the Vietnam Jinyu Fertilizer Project, the value of the Vietnam Dong and the US dollar depreciated and the RMB appreciated. For this reason, Wuhuan signed a forward exchange contract with the government and locked the exchange rate at a point acceptable to both parties.
Due to the well-controlled risk, the Jinyu Fertilizer Project is progressing smoothly and all risks are under the control of Wuhuan Company.

Improve project contracting capacity

In September 2002, China Tianchen Engineering Co., Ltd. (referred to as Tianchen Company, formerly the No.1 Design Institute of the Ministry of Chemical Industry) obtained the contracting rights for the annual production of 200,000 tons of heavy soda ash in Iran's Semnan with the comprehensive advantages of technology and price. This is the second soda project the company has built in Iran. As early as 1998, Tianchen Company undertook the construction of an Iranian project with an annual output of 200,000 tons of soda ash. Compared with the previous soda project, the owner's control and implementation of the on-site construction increased the difficulty of the trial run, driving, and assessment of the project, which increased the risk of project contracting. Tianchen Company took full advantage of its technological advantages in the field of soda ash, strengthened its research and demonstration of design proposals, boldly adopted new methods such as new processes, new materials, DCS centralized control and interlock control, and advanced advanced three-dimensional software technology to improve design solutions. The accuracy of the quality and data statistics makes the engineering design more reasonable, advanced and reliable. The basic design plan was reviewed by the driving team to ensure the smooth running of the car. The total construction period of the project was one month ahead of the contract period. The project was successfully started on May 18, 2006. The product quality reached the design requirements and was highly praised by the builders. The success of this project has further enhanced Tianchen’s popularity in the international market.
The first phase of the Iranian refinery reconstruction project started international tendering in 1998. Sinopec Engineering Construction Company (Sinopec Engineering Company) won more than 10 engineering companies and received a total of US$150 million in refinery reconstruction projects. At the technical level, Sinopec Engineering Company has deployed elite troops, translated relevant international technical standards and norms, and made unpleasant supplements to unfamiliar standards and standards, which has solved standards barriers. By executing the project, the Chinese company is familiar with the number of international projects.
With the improvement of technological capabilities, Chinese companies began to contract projects across industries.
Construction of foreign power projects by China Chengda Engineering Co., Ltd. with a strong chemical background (formerly the eighth design institute of the Ministry of Chemical Industry, or simply Chengda Corp.) seems to be a bit unimaginable to most people. However, it is precisely this extremely challenging project that Chengda has turned it from an original concept into an objective reality.
In July 1993, Chengda Corporation participated in the international tendering of two 25,000-kilowatt turbine power stations in Indonesia's Tolsa, winning the bid for the success of 13 engineering companies at home and abroad and successfully completing and commissioning, opening up a precedent for a chemical engineering company to build a power station project. .
In the second half of 2002, Chengda Company participated in the international bidding of the 2 × 300MW power plant project in Zhirazha, Indonesia, and signed the general contract with the project owner on May 30, 2003. The contract amount is 510 million U.S. dollars.
Chiraga Power Station is the largest power plant project in Indonesia at the time and the first large-scale power station project built by Chengda Company overseas. Before the bidding, Chengda company carefully examined the project owners. During the implementation of the project, Chengda Company strictly operated according to the international project general contracting mode, insisted on project management as the leader, and made full use of domestic and foreign high-quality resources in the aspects of engineering design, equipment manufacturing, construction technical guidance, and trial operation. There are powerful and experienced professional companies at home and abroad, which combine strengths and strengths to complement each other.
Due to the lack of technical personnel for power station construction, the local construction and installation subcontractors are not familiar with the equipment manufactured in China. Chengda Company specially invited domestic experienced electric construction installation units as partners to send experienced technicians to install workers. Guidance to ensure project quality and construction period.
After laying the first construction pile on site on April 28th, 2004, after nearly 30 months of intense work, the two sets of units in the contract completed the installation, test run, and assessment acceptance in April and September 2006 respectively. , Smoothly achieve the ultimate goal of the factory to deliver the business operations of the owners.