China’s National Energy Administration (NEA) is considering granting crude oil import rights to more domestic refiners beyond the five state-run companies which dominate crude imports quotas currently, a move to break monopoly of domestic oil import market.
Refiners seeking crude oil import rights are required to reach the standards set by the energy regulator. The standards take into account a series of economic and technological factors including oil products wholesale trading license, production scale and safety, product quality, environmental protection, etc.
Most importantly, refiners applying for crude import quotas must be able to process a minimum of 5 million tons of crude per annum for primary processing, with a minimum of 3 mtpa by a single processing unit; secondary and third rounds of processing capacities must reach 3 mtpa and 4 mtpa respectively.
Some local teapot refiners are actively preparing for the applications, observers, however, believe that most of them may fail to meet the standards. In Shandong province, no refiners are qualified for the capacity requirements for secondary and third rounds of processing, local Chinese newspaper National Business Daily said.
At least ten teapot refiners have submitted their applications so far. Among the applicants, Shandong Dongming Petrochemicals Group, Sinochem Hongrun Petrochemical Co. and Shandong Haihua Group stand high chance to win crude import quotas estimated at 5 million tons each in next year.
China’s crude import market is monopolized by five state oil giants including CNPC, Sinopec, CNOOC, Zhuhai Zhenrong Co. and Sinochem Group.
NEA is seeking recommendations on the proposal and a final policy is expected to be announced in November.