China is allowing additional crude oil import quotas to predominantly private oil refiners in the world’s top oil importer, Reuters reported on Tuesday, citing a document it has seen.
The additional quotas for 33 private refiners and 10 government or province-run refiners allow those 43 refineries to import an additional 56.85 million tons of crude oil for the rest of this year, bringing the total volume of allowed import quotas issued this year to 151 million tons, equivalent to 3.02 million barrels per day (bpd), according to Reuters calculations.
The biggest winner in the new import quotas was private chemical and refinery giant Hengli Petrochemical, which had a new refinery start up earlier this year.
The total 3 million bpd of import quotas for this year equals one third of total Chinese crude oil imports so far in 2019—at around 9.91 million bpd between January and May, according to Reuters estimates.
Independent refiners, also referred to as ‘teapots’, have been instrumental in China’s oil demand jump over the last four years, driving up global demand as well and directing oil price predictions from analysts and the oil industry.
The first batch of the import quotas for 2019 that China issued in January this year was for 20 percent lower volumes compared to the first batch of quotas last year, but analysts expected volumes to be higher in the following batches.
Last month, China agreed to grant crude oil import licenses to four independent refiners. This was the first round of import license awards for independent refiners since May last year, when Beijing granted licenses to a dozen teapots.
Meanwhile, Beijing has been awarding oil product export quotas—and higher ones; since the start of the year, the quotas have exceeded 50 million tons of oil products. That’s despite an oversupply on the domestic market that has begun seeping into neighboring markets, pushing refiners’ margins lower.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.