Four China teapot refineries apply for 14.47 mil mt/year of crude quotas


Four more Chinese independent teapot refineries, with a total capacity of 15.6 million mt/year, have joined others in applying to the National Development and Reform Commission to process around 14.47 million mt/year of imported crudes, the government said on its website late Tuesday.

The four new applicants, together with three other refineries still waiting for the NDRC's final nod for a total of 9 million mt/year of crude import quotas, and 11 that have been granted quotas, will bring the total applicants to 18.

Once those seven teapots get approved, it will bring the total volume of crude quotas granted to teapot refineries to 72.66 million mt/year, with 49.19 million mt/year awarded to 11 teapot refineries.

This will be around 22% of the country's total imports in a year, since China has imported around 6.63 million b/d of crudes over January-November this year, according to the latest customs data.

The four new teapot refinery applicants, three from eastern Shandong province and one from central Henan province, have a combined installed capacity of 15.6 million mt/year.

All four have committed to get rid of small crude distillation units smaller than 2 million mt/year (40,000 b/d) and to update fuels to National Phase 5 standard, setting up gas infrastructure such as storage tanks in order to qualify for a crude import quota.

The 5.2 million mt/year Qingyuan Petrochemical has planned to apply for a quota of 4.62 million mt/year quota and the 3.8 million mt/year Hengyuan Petrochemical would like to apply for a 3.72 million mt/year quota, while the 3.2 million mt/year Xinyue Petrochemical plans to seek a quota of 3.2 million mt/year. All those three refineries are from Shandong.

The 3.4 million mt/year Fengli Petrochemical in Henan province would like to seek a quota of 2.93 million mt/year.

Once approved with the quotas, teapot refiners can apply to the Ministry of Commerce for the volume of crudes they would like to import for the year through state-owned oil majors or other companies that hold a crude import license.

The Chinese government took a major step toward deregulating its oil market early this year with the allocation of crude import quotas to teapot refiners -- small independent refiners not affiliated with the major Chinese state-owned oil companies.

This was followed a few months later with the announcement that teapot refiners will not only be able to process imported crude, but will be given a license to import crude directly.

Prior to these changes, teapot refiners primarily processed fuel oil and domestic crude. Any imported crude they processed was obtained via a special arrangement from state-owned companies. Only a handful of state-owned companies have until now had the right to import crude.

Teapot refiners are mainly concentrated in Shandong province, though a few are located in the north and south of the country. They account for approximately 30% of China's total refining capacity of around 15 million b/d.

Source from : Platts