More re­fin­ers al­lowed to im­port oil

China Daily (Hong Kong) - - BUSINESS - By DU JUAN du­juan@chi­

The State Coun­cil, China’s cabi­net, will grant crude oil im­port quo­tas to “qual­i­fied” re­finer­ies, which ex­perts say is a step for­ward in trim­ming large State-owned re­fin­ers’ im­port monopoly.

The No 83 Doc­u­ment from the cabi­net, is­sued on July 27, mainly fo­cuses on pro­mot­ing im­ports and ex­ports.

The doc­u­ment said the cen­tral govern­ment may grant oil im­port rights to more re­finer­ies be­yond the dom­i­nant com­pa­nies, tak­ing into ac­count stan­dards for en­vi­ron­men­tal pro­tec­tion, se­cu­rity and en­ergy con­sump­tion dur­ing the re­fin­ing process.

In China, five State-owned com­pa­nies have crude im­port rights, in­clud­ing two en­ergy gi­ants — China National Pe­tro­leum Corp and China Petro­chem­i­cal Corp.

In the past year, China National Chem­i­cal Corp ( ChemChina), which is fo­cused on petro­chem­i­cal down­stream busi­nesses, got a quota of 10 mil­lion met­ric tons for im­ported crude, which was seen as a ma­jor step in break­ing the mo­nop­o­lized oil im­port mar­ket in China.

How­ever, Li Li, a se­nior man­ager at ICIS C1 En­ergy, a Shang­hai- based en­ergy in­for­ma­tion con­sul­tancy, said ChemChina’s new sta­tus is sig­nif­i­cant, but it won’t be easy for other pri­vate re­finer­ies to em­u­late.

“China’s crude oil re­fin­ing in­dus­try has been ask­ing for years for the open­ing up of the crude im­port mar­ket,” said Li. “Some pos­i­tive poli­cies have emerged grad­u­ally, but they don’t make the new pol­icy a ‘mile­stone’.”

The in­ter­na­tional oil ma­jors would like to see China fur­ther open up its im­port mar­ket, which will mean huge ben­e­fits for them since the coun­try is about to be­come the world’s largest crude oil im­porter, she said.

Ac­cord­ing to a re­port by the United States En­ergy In­for­ma­tion Ad­min­is­tra­tion, China’s net oil im­ports will ex­ceed those of the US on an an­nual ba­sis within about two months.

“It is the trend that China’s crude im­port mar­ket will be more mar­ket- ori­ented and less mo­nop­o­lized, but it is still un­cer­tain how long it will take to fully re­al­ize (the change),” Li said.

“The State Coun­cil is the top pol­i­cy­maker and it usu­ally takes a long time from the top down, which is sim­i­lar to the process of eco­nomic re­form as it in­volves many par­ties’ in­ter­ests.”

China’s crude oil con­sump­tion last year was 475 mil­lion tons, up 4.7 per­cent year-onyear, ac­cord­ing to CNPC.

China im­ported 269 mil­lion tons of crude in 2012, with a for­eign de­pen­dency ra­tio of about 57 per­cent.

Ac­cord­ing to the CNPC Eco­nomic and Tech­nol­ogy Re­search In­sti­tute, China will im­port about 289 mil­lion tons of crude oil this year, which means that about 59 per­cent of the na­tion’s crude oil de­mand will de­pend on im­ports in 2013.

As the coun­try’s oil con­sump­tion in­creases, its de­pen­dency on im­ports will con­tinue to rise.

When China joined the World Trade Or­ga­ni­za­tion in 2001, it promised that the crude im­port quota of non­State trad­ing or­ga­ni­za­tions would grow 15 per­cent an­nu­ally from 2006 to 2010.

So far, dozens of pri­vate com­pa­nies have been granted crude oil and pe­tro­leum im­port cer­ti­fi­ca­tions by the Min­istry of Com­merce.

How­ever, up to 90 per­cent of the crude im­ports is still con­trolled by the two gi­ants of the in­dus­try.

As for crude pipe­line con­struc­tion and oil stor­age fa­cil­i­ties, the govern­ment is en­cour­ag­ing the par­tic­i­pa­tion of pri­vate cap­i­tal.

Ac­cord­ing to an in­dus­try source, Ty­loo En­ergy Co and Zhongji Chem­i­cal Co in Zhoushan, Zhe­jiang prov­ince, ac­quired crude stor­age li­censes from the Min­istry of Com­merce dur­ing the first half of the year.

The two com­pa­nies are sub­sidiaries of Ty­loo In­vest­ment Group, which is said to be plan­ning an ex­pan­sion of its in­volve­ment in in­ter­na­tional crude oil trad­ing.

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