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China has considerably reduced the allowances for fuel exports in the first export quota batch for 2022, signaling its intention to limit fuel sales abroad and curb excessive refinery output.
In the first quota distributions for this year, the overall volume of the permitted gasoline, diesel, and jet fuel exports was more than halved—slashed by 56 percent compared to the first batch of export quotas granted in 2021, Reuters reported on Tuesday, citing industry sources.
Most of the first batch of 2022 export quotas was granted to large state-run refiners, including China National Petroleum Corporation (CNPC), China National Offshore Oil Corporation (CNOOC), Sinopec, and Sinochem Group, according to Reuters’ sources.
“Looks like this year’s total fuel export quota will keep declining,” Yuntao Liu, an analyst with Energy Aspects, told Bloomberg, commenting on the first export quotas for 2022.
Lower volumes of allowed fuel exports could increase the competition between state-owned refiners and the smaller private refiners, typically known as teapots, the analyst added.
China is said to be looking to limit fuel exports and reduce the oversupply of refined products as part of a larger plan to cut emissions.
The world’s largest crude oil importer issued the first batch of quotas for both crude imports and fuel exports later than usual, amid demand uncertainty during the pandemic and investigations into the tax practices of some private refiners, traders told Bloomberg.
Last week, Chinese authorities granted 11 percent lower crude import quotas to independent refiners in the first batch of quota allowances for 2022. The government, intent on reforming the independent refining sector and cracking down on tax evasion and illicit practices at the teapots, is now allowing its independent refiners to import 109 million tons of crude oil in the first batch for 2022. The three biggest private refiners—Zhejiang Petrochemical, Hengli Petrochemical, and Shenghong Petrochemical—together accounted for around 38 percent of all first-batch import allowances, a document seen by Reuters showed.
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.