China to import more crude oil
New regulations have been put in China which they hope will encourage more imports of crude oil.
Under rules posted by the National Development and Reform Commission (NDRC) on its website (www.ndrc.gov.cn), domestic refiners will be able to apply for access to imported oil if they meet new technical and environmental standards. Firms can then apply to the Commerce Ministry to import oil.
The NDRC said the new measures were aimed at “solving the crude oil supply problems of regional refining enterprises.”
China, the world’s second-largest oil consumer, regulates its oil imports via a quota system to ensure stable domestic supply. State-owned Sinopec and PetroChina account for nearly 90% of imports, while almost all of the rest is imported by firms associated with the big two.
The government has pledged to allow more private participation as part of a broader move to reform its clunky and inefficient state-owned sector.
Independent oil refineries, a main swing supplier of the world’s second-largest fuel market, have been eagerly awaiting the changes. Deprived of crude oil as feedstock, the plants have to import lower-quality fuel oil for processing into gasoline and diesel.
China began tentative reforms in 2013 by allowing state-run ChemChina, an operator of independent refineries, a quota of 200,000 barrels per day (bpd).
Senior trading sources told Reuters recently that the independents were set to be granted quotas for 20 million tonnes of crude oil in 2015, amounting to 400,000 bpd.
China imported 308 million tonnes of crude oil in 2014, up 9.45 % on the year and amounting to 6.17 million bpd.
To qualify under the new rules, firms must have at least one crude distillation unit with an annual processing capacity above 2 million tonnes, or 40,000 bpd, must consume no more than 66kg of standard oil for every tonne they refine, and must meet the latest local or national standards for their oil products, the NDRC said.
Firms will be able to import oil in amounts no greater than their total processing capacity.
The NDRC said the new standards will encourage more mergers and acquisitions and help eliminate outdated polluting capacity from the sector.
Firms that own stakes in overseas oil projects would also be given priority to use imported oil, it added.