From hinterland to wonderland: China's 'teapot' refinery boomtowns

Wed May 25, 2016 2:45am EDT
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By Meng Meng and Chen Aizhu

BOXING, China/BEIJING (Reuters) - For Zheng Ruifeng, the 25-year-old son of a wheat farmer from eastern China, acceptance at a technical school specializing in petrochemical engineering was a life-changing event.

Zheng, who grew up expecting to spend a lifetime toiling on the family farm, instead works as a technician monitoring control panels for Chambroad Petrochemical, one of China's largest independent refineries.

Earning 5,000 yuan ($760) per month - roughly five times what he could have expected to make working the fields - he got married two years ago and bought an apartment in nearby Boxing.

"At our company, employees are considered losers if they cannot save enough money to buy a home within five year of being hired," Zheng said.

Zheng's story offers a vivid example of the new wealth created by China's so-called "teapots" - independent oil refineries that have become a new force in global energy markets since Beijing allowed them to start importing crude last year.

The teapots, who previously refined mostly low-margin fuel oil and whatever excess crude they might be able to pick up from the big state-owned players, have seen their profits soar.

The rise of the teapots, now able to refine imported crude in much greater quantities into high-value products such as gasoline, is reshaping the local economy in dilapidated rural parts of eastern Shandong province, where most are located.

At Boxing, a new Volkswagen dealership and freshly painted condos line a four-lane highway leading to the Chambroad refinery, where smoke-stacks rise above swathes of farmland.   Continued...

A staff walks in a museum of Chambroad Petrochemicals in Boxing, Shandong Province, China, May 10, 2016. REUTERS/Meng Meng