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China has issued its first batch of 2022 crude oil import quotas at a volume 11per cent below 2021’s first allotment, according to industry sources and a document reviewed by Reuters, with large private firms winning out over smaller processors,
Global oil prices pared gains following the drop in import quotas from the world’s top crude importer, which it pegged at 109.03 million tonnes for the first round.
Among the 42 companies granted quotas, the country’s top three private refiners – Zhejiang Petrochemical Corp (ZPC), Hengli Petrochemical and Shenghong Petrochemical – together won 41.95 million tonnes. That was about 38per cent of the total and nearly 50per cent more than a year earlier.
ZPC, China’s single largest refiner with total crude oil processing capacity of 800,000 barrels per day, was awarded 20 million tonnes, followed by Hengli with 14 million tonnes and Shenghong at 7.95 million tonnes, according to the document from the Ministry of Commerce.
Smaller plants, most of which are based in eastern refining hub of Shandong province, received a total of 51.4 million tonnes of quotas, about 26per cent less than a year ago, the documents showed.
Analysts said the trend is in line with Beijing’s policy to consolidate its refining sector by removing excessive, inefficient processing capacity in favour of mega and more technologically advanced complexes.
“Overall the latest quota release is within market expectation, which is mega integrated firms are gaining favour at the expense of traditional (smaller) plants,” Chinese commodities consultancy Longzhong said in a note on its WeChat account on Thursday.
The commerce ministry did not immediately comment.
Shandong province is expected to shutter refineries with daily capacity of more than half a million barrels by the end of 2022 to make way for a new petrochemical complex.
Environmental investigators this month also uncovered tens of millions of tonnes worth of illegally built crude oil processing capacity in the province.
China has set total crude import quotas for non-state companies in 2022 at 243 million tonnes, the same level as it initially planned for 2021.
China issued 122.59 million tonnes permits under the first batch of quotas for 2021. Total issuance in 2021 was smaller than planned at about 189 million tonnes.
