Page 9 - AsianOil Week 27

AsianOil EAST ASIA AsianOil

China issues first private

fuel export licence

The central government has reportedly issued an oil product export
licence to privately owned Zhejiang Petroleum & Chemical (ZPC)

COMMENTARY CHINA has reportedly granted a fuel export ZPC’s licence was awarded after the govern-
licence to a private refiner, a sign that the inde- ment tested the waters earlier this year by allow-
pendent downstream sector is emerging from ing the company to export 1mn tonnes of very
WHAT: the shadow of the state-owned giants. low sulphur fuel oil (VLSFO) via state-run trad-
ZPC will now be able to The central government awarded Zhejiang ers. The licence award, while significant, is not
export fuel directly. Petroleum & Chemical (ZPC) an oil product all that surprising given that the private sector is
export licence, Reuters reported on July 9, quot- investing in upgrading facilities in order to chal-
WHY: ing two unnamed sources. lenge the dominance of their state rivals.
The company owns The move is a milestone for the country’s ZPC launched its 400,000 barrel per day
a 400,000 bpd smaller privately owned downstream opera- (bpd) integrated refinery and petrochemical
integrated refinery and tors, which have been campaigning for years to complex in Zhoushan last year, while Hengli
petrochemical complex. be allowed to export fuel. China had limited its Petrochemical also started up a similarly sized
export quotas to state-run companies, freezing facility near the northeastern port city of Dalian.
WHAT NEXT: out the private sector since 2016. These plants are larger, more modern and more
More private fuel export The move, however, is a signal that China’s efficient than the majority of China’s state-run
licences are likely to be long-term agenda of evolving the country’s tea- downstream complexes.
granted to major private pot refiners into an efficient and viable rival to The central government had been waiting
refiners. the state sector is nearing completion and fur- for such refineries to come online before it even
ther such licence awards appear a likely next step. contemplated easing restrictions on the teapot
sector’s ability to export fuel.
Export licence The government has long wanted teapot
ZPC is waiting for the government to issue its refiners to consolidate their operations, tying the
export quota, the newswire’s sources said. As offer of direct crude import quotas in 2015 to a
it stands, only Sinopec, China National Petro- requirement that downstream operators shutter
leum Corp. (CNPC), China National Offshore crude distillation units (CDUs) with less than
Oil Corp. (CNOOC), Sinochem and China 2mn tonnes per year (40,000 bpd) of capacity.
National Aviation Fuel (CNAF) traditionally In fact, years of policy aimed at shuttering
receive quotas. outdated, inefficient and polluting small-scale

Week 27 09•July•2020 www. NEWSBASE .com P9