Trade Resources Industry Views Beijing Expected to End Oil Product Export Quotas

Beijing Expected to End Oil Product Export Quotas

2.0 (1 Vote)

China's independent refineries likely have to rely on state-owned trading companies to export oil products in 2017 as Beijing is likely to stop awarding them quotas to export directly, informed sources said Friday.

"It [stopping awarding quotas] is to restrict the growth of exports from independent refineries," said a source from a state-owned trading company, adding that the Ministry of Commerce had already held talks with the state-owned company about matter.

"The independent refineries are still allowed to export, but need to sell through the state-owned trading houses which have normal trade permission," he added.

The normal trade permissions were expected to be awarded only to the trading arms of Sinopec, CNPC, CNOOC and Sinochem, sources said. The ministry was not available to comment on Friday.

But several factors support the suspension, the foremost of which is that the policy of allocating export quotas to independent refiners is temporary.

"We are not sure whether the government would still allow us to export after the end of this year," said Zhang Liucheng, VP of Dongming, the country's biggest independent refinery.

During the APPEC meeting in September, Zhang said oil product exports by independent refineries were expected to rise with more investment for better infrastructure if the government continued to issue them with export quotas.

The Ministry of Commerce in mid-November last year said it would allow independent refiners that had already won crude import quotas the right to export oil products, but the permission only ran until the end of 2016.

This year, 12 independent refineries hold a total 1.675 million mt of oil products export quotas.

Under the quotas, they are allowed to directly sell their oil products -- which must be processed from imported crude oil -- to overseas buyers.

Over January-November, exports from the sector were around 750,000 mt, data from S&P Global Platts' showed.

At the same time, China exported a total of 30.2 million mt of gasoline, gasoil and jet fuel, up 36% on the year.

"In addition, there is some scent of export policy changes next year as the quota application has been delayed for more than half a month," a policy observer said. "It is possible that the authorities need time to consider changes."

Normally, oil companies submit their export quota application to MOFCOM by mid-November, with the quota for the first quarter of the following year allocated by the end of December.

"We have been preparing for the quota application since late October, but don't know when the government will start to collect and process them," said a Shandong-based independent refiner.

But while independent refiners may be barred next year from direct exports of oil products, they will still be able to export indirectly by selling products via normal trade permission holders.

Beijing in early November resumed tax rebates on exports of gasoline, gasoil and jet fuel under normal trade, making them competitive.

CNPC's trading arm Chinaoil was said to export the first cargo of oil products under normal trade in December.

Contribute Copyright Policy
Beijing Expected to End Oil Product Export Quotas for Independent Refiners
Topics: Metallurgy