Zhoushan sees prosperity in shipbuilding, fuel industries

Hu Huixin / SHINE

Zhoushan, at the meeting point of China’s eastern shore and the Yangtze River, is an offshore city that consists of 1,390 islands and 3,306 reefs. It’s also the frontier of China’s energy strategy, as well as its shipbuilding and fishing industries.

Ever since the central government established the China (Zhejiang) Pilot Free Trade Zone there in 2017, Zhoushan has had many unique opportunities for development by virtue of its location, port facilities, marine resources and other advantages.

During the past three years, the local shipbuilding and petrochemical industries have been greatly developed under the nation’s strategic support. Meanwhile, government departments have launched innovative services and policies to enhance efficiency and boost the talent pool.

Shipbuilding has become the main impetus of Zhoushan’s economic growth in recent years.

Liuheng Island, home to three of the world’s top 10 shipbuilding companies and 12 shipyards, has the capability to build and repair 1,500 ships per year.

Since the International Maritime Organization decided in 2016 that the sulphur levels in ship fuels have to reach 0.5 percent in 2020, compared to 3.5 percent previously, many ship owners opted to continue with heavy fuel oil while installing scrubbers that remove sulphur from exhaust fumes.

COSCO Shipping Heavy Industry (Zhoushan) Co is Zhejiang Province’s largest producer of scrubbers. Last year, it produced 54 scrubbers with a sales value of 713 million yuan (US$101 million). Now, about 65 ships are undergoing the upgraded construction of scrubbers, which is expected to bring 1.13 billion yuan in revenue. More contracts are slated to be signed during the coming months.

Wu Huixin / SHINE

“Our company is close to international sea routes and navigation hub clusters in Asia. This ideal location attracts clients from around the world,” said Zhou Jianhua, president of COSCO. “The growth has also been fueled by the establishment of Zhoushan FTZ, an international oil and gas storage and transportation base.”

Today, scrubber construction has become one of COSCO’s main businesses, recording annual growth of 70 to 80 percent.

The company has been running its shipbuilding business since 2006. So far, it has completed 105 bunkering tankers and vessels for clients from Denmark, Norway, Brazil, the US and Greece. Another 11 are now under construction.

The largest ship it ever built was a FPSO (floating production storage and offloading) vessel for a Brazilian petroleum company.

The ship measures 316 meters in length, 31 meters in depth and 74 meters in breadth, with storage capacity of 1.67 million standard-size oil barrels. It took more than two years to design and build the ship.

Another highlight among its completed ships is the 3,600-TEU container vessel made for Denmark MAERSK Line.

This ship was built with a protruding bulb at its bow (or front) just below the waterline. The bulb modifies the way water flows around the hull, reducing drag and thus increasing fuel efficiency. It also increases buoyancy and hence reduces the pitching of the ship.

Wu Huixin / SHINE

The ship’s maiden voyage for Europe was northward via the Arctic Ocean, instead of the conventional route through the Strait of Malacca, Indian Ocean and Mediterranean Sea.

“The bulbous bow made it possible to voyage in the Arctic Ocean. That could help save nearly a quarter of time and cost,” Zhou explained to Shanghai Daily.

In efforts to complete orders on time amid the COVID-19 outbreak, COSCO has introduced stringent measures to control the spread of infection among its staff. Every returned worker had a nucleic acid test and CT scan to eliminate risks of infection in the factory.

With some 4,000 of its workers not traveling home for Chinese Lunar New Year, the factory resumed full production on February 10.

“First-quarter revenue won’t be affected by the pandemic. On the contrary, it still increased year on year, thanks to coordination and help from central and local governments,” said Zhou.

COSCO covers an area of 2 million square meters over three shipyards. Within the next few years, it will have the potential to grow into a mega shipyard and be capable of servicing all marine activities.

The booming shipbuilding industry is tied to the focus on constructing an international oil and gas storage and transportation base and petrochemical industry base at the Zhoushan FTZ.

The local government plans to achieve three 100-million-ton targets: in reserve capacity, refining capacity and trading capacity. By the end of the 13th Five-Year Plan (2016-20), Zhoushan will become one of the largest and most competitive oil storage and logistics bases in the world.

At present, Zhoushan has attracted nearly 6,000 oil and gas enterprises, with accumulated trade volume surpassing 1,000 billion yuan. Total storage capacity has reached 27.9 million tons and annual throughput is over 88 million tons.

A 300,000-ton oil terminal on Huangzeshan Island belongs to Zhejiang Petroleum and Chemical Co, one of the largest and oldest oil storage and transportation companies in Zhoushan.

According to a development blueprint for Huangzeshan Island, another two 300,000-ton oil terminals will be completed in the coming years. Its capacity will total 15 million cubic meters.

Wu Huixin / SHINE

Parallel pipelines deliver oil straight from the shore, while loading arms transfer oil onto bunker barges. These barges go to an anchorage where vessels are supplied with fuel.

Today, Zhoushan is the largest bunkering port in China, and one of the top 10 globally. Zhoushan plans to supply 7 million tons of bonded marine fuel in 2020, with a long-term goal of 20 million tons annually.

Bunkering refers to the supply of fuel to ships, including loading and storage. The term originated in the days of steamships when coal was stored in bunkers.

“Formerly, storage capacity in Zhoushan Archipelago was separated. Now the Huangzeshan Project can support developing the entire oil and gas supply chain,” said Chai Tieji, office director of the project. “In return, it gives a boost to industrial transforming and upgrading in Zhoushan.”

As the world’s largest producer and consumer of energy, China gives new impetus to the development of petrochemicals in Zhoushan.

The outlying Yushan Island has transformed from barren land to Zhoushan Green Petrochemical Base since 2014. By the end of 2019, it has reached an annual production of 20 million tons of petrochemicals.

Since the establishment of the FTZ, Zhoushan has initiated a paperless single-window declaration system. The time required for customs clearance has been reduced from 16 hours to two hours.

Wu Huixin / SHINE

In a bid to boost efficiency during the COVID-19 pandemic, China Immigration Inspection (CII) in Zhoushan has launched 24/7 service to safeguard the transportation of medical suppliers, food and fresh agricultural products. The unloading time has been cut down at least six hours, saving around 2,000 yuan for every ship.

By March 17, Zhoushan had inspected 1,339 vessels and 28,828 people on board, up 8.8 percent and 51.03 percent compared with the same period last year.

“While the country was badly hit by COVID-19 over the past two months, we have used technology to conduct online inspection and reduce face-to-face contact. Ships could book service beforehand via our online platform and smart phone application,” said He Jiangwei, a staff member with Zhoushan CII.

Compared with other cities in Zhejiang Province, Zhoushan has a small population of 1.1 million. In recent years, Zhoushan government has launched policies to boost its talent pool, attracting people with university degrees in shipbuilding and petroleum fields.

“People with doctoral degrees can get 300,000 yuan in housing subsidies. That can greatly relieve the burden of buying an apartment in Zhoushan,” said Jin Ye, office director of the Zhoushan government’s human resource department.

So far, around 8,000 professionals have flocked to Zhoushan Green Petrochemical Base. An additional 6,000 professionals are working in other local oil and shipbuilding companies.

“We are offering attractive talent policies to compete with neighboring Ningbo, Hangzhou and Shanghai. Now, around 27,000 graduates return to Zhoushan each year, jumping sharply from the previous annual number of 5,000 graduates.”

Wu Huixin / SHINE