Page 10 - AsianOil Week 15 2021

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China clamps down on

teapot refineries again

The central government has once again turned its gaze upon the sector, with a view
to shuttering inefficient capacity and facilities that operate in grey legal areas

COMMENTARY CHINA is reportedly launching a new clamp- “The intensity and depth of this inspection
down on the private refining sector, with state may be greater than any checks before,” the
inspectors investigating refining facilities for any newswire quoted Chinese consultancy JLC
WHAT: signs of inefficiency or impropriety. as saying on April 13. The consultancy added
The NDRC has launched Bloomberg reported this week that the coun- that the scale of problems affecting the indus-
a wave of probes into try’s top economic planner, the National Devel- try, and even enforcement of current rules, was
independent refiners. opment and Reform Commission (NDRC), had unknown.
launched inspections at more than 50 privately NDRC officials and industry experts will
WHY: owned oil refineries. carry out each site inspection, which is expected
Concerns surrounding The newswire cited unnamed sources as say- to last three to five days, before submitting their
overcapacity have ing the commission had launched the probe in findings to the central government.
triggered the direct response to growing government concern Bloomberg cited a China Energy News report
investigation. about downstream overcapacity. in March as the catalyst for the increased gov-
ernment scrutiny, noting the state-run industry
WHAT NEXT: Under scrutiny news outlet had estimated that downstream
Smaller refineries will Bloomberg’s sources said the probe would estab- overcapacity could balloon to 150mn tonnes
be squeezed by the lish whether outdated and polluting capacity had per year (3mn barrels per day) by 2025 without
government as well as been closed down as per government instruc- government intervention.
state and private rivals. tions. Indeed, inspectors will visit 17 small refin- The paper, which is run by the official Peo-
eries in Shandong Province that were scheduled ple’s Daily, reportedly accused some refineries
to shut down last year in order to ensure that this of meeting capacity reduction targets by double
actually happened. counting capacity cuts.
Even modern facilities will come under Bei-
jing’s microscope, with facilities that have won Bugbear
crude import quotas set to be inspected for The central government has had a strained rela-
instances of tax evasion and the illegal resale of tionship with the private downstream for the
imported oil. past couple of decades, frequently clamping

P10 www. NEWSBASE .com Week 15 15•April•2021