Pri­vate firm Guanghui gets oil im­port li­cense, shares jump

Move seen as sign of gov­ern­ment’s will­ing­ness to break up mo­nop­oly

China Daily (Canada) - - BUSINESS - By DUJUAN dujuan@chi­

Share prices of Guanghui En­ergy Co jumped by the daily limit of 10 per­cent on Thurs­day to 8.98 yuan ($1.46) af­ter the pri­vate firm was granted a crude oil im­port li­cense onWed­nes­day, a move that echoes the gov­ern­ment ’ s ef­forts to break the mo­nop­oly in the oil mar­ket.

Xin­jiang Guanghui Pe­tro­leum Co Ltd, a wholly owned sub­sidiary of Guanghui En­ergy, was granted an im­port quota of 200,000 met­ric tons of crude oil for 2014, be­com­ing the first pri­vate com­pany to ob­tain such a li­cense, ac­cord­ing to a reg­u­la­tory fil­ing to the Shang­hai Stock Ex­change late on Wed­nes­day.

“The new ap­proval of the crude im­port rights to the com­pany will help it par­tic­i­pate in the oil mar­ket, which has been dom­i­nated by Sinopec Group and PetroChina Co since 1998,” said Han Jingyuan, an en­ergy an­a­lyst at JYD On­line Corp, a Bei­jing-based bulk com­mod­ity con­sul­tancy.

As the world’s sec­ond-largest oil con­sumer, China has strict reg­u­la­tions on crude im­ports. It di­vides com­pa­nies in two groups: The five Sta­te­owned com­pa­nies — Petro- China Co Ltd, Sinopec, CNOOC Ltd, Sinochem Corp and Zhuhai Zhen­rong Corp— have no lim­its on crude im­ports; 22 other com­pa­nies, with im­port li­censes, are given rights to im­port crude via a quota sys­tem.

In 2013, China im­ported 282 mil­lion tons of crude, with the sec­ond group ac­count­ing for only 29.1 mil­lion tons, its max­i­mum quota.

The gov­ern­ment has re­cently made moves to be more open to pri­vate in­vestors as part of the coun­try’s en­ergy in­dus­try re­form.

Xin­jiang Guanghui Pe­tro­leum be­came the first pri­vate com­pany to re­ceive a crude im­port li­cense be­cause of its over­seas oil as­sets, Han said.

The com­pany ac­quired a 49 per­cent stake in Kaza­khstan­based Tarba­gatayMu­nay LLP, or TBM, in 2009, thus gain­ing in­di­rectly a 49 per­cent stake in the Zaysan oil­field owned by TBM.

The Zaysan oil­field is ex­pected to have an an­nual pro­duc­tion ca­pac­ity of 500 mil­lion to 600 mil­lion cu­bic me­ters of nat­u­ral gas and about 1 mil­lion tons of thick oil, ac­cord­ing to ICIS C1 En­ergy, a Shang­hai-based en­ergy in­for­ma­tion con­sul­tancy.

Xin­jiang Guanghui Pe­tro­leum signed an agree­ment in 2012 with Kaza­khstan to ac­quire an­other oil­field with ex­pected crude re­serves of 210 mil­lion tons, ac­cord­ing to ICIS C1 En­ergy.

Li Li, re­search and strat­egy direc­tor at ICIS C1 En­ergy, said the oil im­port li­cense can bring ap­prox­i­mately 1 bil­lion yuan an­nu­ally in sales rev­enue to Xin­jiang Guanghui Pe­tro­leum.

“How­ever, it is still a long way from break­ing the mo­nop­oly since the vol­ume is too small com­pared with China’s to­tal crude im­ports,” Li said. “The 200,000 tons of crude are just a drop in the bucket for re­finer­ies.”

Since Xin­jiang Guanghui Pe­tro­leum has no re­finer­ies in China, it will be al­lowed to sell the im­ported crude oil to qual­i­fied do­mes­tic re­finer­ies.

Many other com­pa­nies are pre­par­ing to in­vest in re­lated en­ergy busi­nesses in or­der to ob­tain crude im­port li­censes.

An in­dus­try ex­pert close to theN­ational En­ergy Ad­min­is­tra­tion said the au­thor­i­ties are tend­ing to grant the li­censes to pri­vate com­pa­nies that al­ready own over­seas oil­field as­sets and large-scale re­fin­ing com­pa­nies.


Oil is un­loaded from a tanker at a port in Zhoushan, Zhe­jiang prov­ince. China im­ported 282 mil­lion tons of crude in 2013.

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