China cuts oil import quotas for private refineries, prices fall


agencies _ The Chinese government reduced the share of crude oil imports granted to independent oil refineries and preferred large complex processing plants in its quest to reform the sector, which led to an immediate decline in oil prices, with Brent crude futures recording a decline of 0.66% to $ 78.71 a barrel.


Beijing granted 109 million tons of import access to 42 private refineries, as a down payment for 2022, according to officials from companies that received notification of the quantities allowed to be imported, and that was 11% less than the first batch of this year.


Nearly 40% of the stake was awarded to three giant refineries: Zhejiang Petroleum & Chemical Corp.; and Hengli Petrochemical Co., Ltd. and Shenghong Group.

These companies operate large, sophisticated factories that are less polluting than small ones, and the allocations fit in with Beijing’s strategy to reform the sector to reduce pollution and crack down on unethical practices.


The government is currently opening an investigation with small processing plants over tax irregularities, and the Ministry of Commerce, which oversees the quota system, did not immediately respond to a fax seeking comment.

The release of the import quota for independent refineries has been delayed this year, and the broader sector is still waiting for the release of fuel export releases. As a result, many Teapots have chosen to ship the fuel oil, which can be processed into other oil products.

The delay in declaring quotas for small companies has led them to resort to an old trick: importing fuel oil, which can be used as a feedstock to produce other oil products, instead of crude oil.

The Ministry of Commerce said in a statement last week that the number of Chinese private refiners and traders applying for the 2022 fuel oil import quota nearly doubled from the previous year.


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