A 99-percent utilization rate of state quotas in China drove oil product exports up 20.1 percent last year, customs data quoted by S&P Global Platts has revealed.
In volume terms, oil product exports amounted to 55.36 million tons, from total quotas of 55.994 million tons.
The biggest increase was booked in gasoline exports. These went up 27 percent on 2018 to 16.37 million tons. The increase was particularly marked in the last month of 2019, when exports of gasoline rose by 35.8 percent on the year.
Jet fuel exports also booked strong growth, rising by 20.1 percent from 2018 to 17.61 million tons.
Gasoil, the third oil product that Beijing issues quotas for, added 15.4 percent in exports, to a total 21.38 million tons.
The Chinese refining industry added new capacity amounting to almost 900,000 bpd last year, in two new refineries operated by independent companies. Yet even before these were put into operation, refiners processed oil at record rates of over 12.6 million bpd.
Now, Beijing has increased the oil product quotas for local refiners: the first batch for 200, issued earlier this month, was 53 percent higher than the first export quota for 2019. At 28 million tons, the oil product export quotas will likely deepen an already serious glut of oil products on Asian markets that have eaten into refiner’s bottom lines.
The quotas were issued to five state oil companies, including PetroChina, Sinopec, CNOOC, Sinochem, and China National Aviation Corp. It will be up to each of the companies to decide which fuels make what portion of their total quota, unlike in previous years.
Meanwhile, China has undertaken to increase its intake of U.S. oil and oil products. What effect will this agreement have on quota size and utilization remains to be seen, although the range of oil products China agreed to import is much wider than the trio of gasoline, gasoil, and jet fuel.
By Irina Slav for Oilprice.com
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