Page 11 - AsianOil Week 24 2021

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The problem now, however, is the afore- how their import quotas were used was also
mentioned ballooning in capacity beyond the carried out, with several teapots found to be
domestic market’s needs. trading quotas to unqualified refiners.
Unusually, inspections have not been lim-
Oversupply ited to the state sector. The newswire reported
CNPC warned in April that global refining last month that five state-owned companies had
margins in the short term were likely to feel been ordered to report on their historic use of
some downwards pressure as facilities that had imported oil.
been closed during the pandemic began com- Top economic planner the National Devel-
ing back online. opment and Reform Commission (NDRC)
Given the above projections for Chinese directed Sinopec, China National Offshore Oil
refining capacity, coupled with the fact that Corp (CNOOC), Sinochem, ChemChina and
Beijing is pushing for greater decarboni- China North Industries to information on their
sation of the economy, and it appears that crude usage since they began crude imports.
more of the East Asian giant’s refined oil will The companies were told to clarify whether they
eventually make its way to the international had either resold crude on the domestic market
market and depressing global margins over or processed imported oil at refineries under a
the longer term. tolling scheme that reduced their tax payments.
Indeed, CNPC has said the country’s fuel
exports could rise by as much as 33% this year What next
following the addition of an estimated 14.74mn Beijing appears to be tidying house while also
tonnes per year (296,000 bpd) of new capacity. taking stock of the current market make-up, an
This is not just a problem for foreign refin- essential step in determining the downstream
eries targeting the export market, however, with sector’s next steps.
China’s state giants slowly being pushed out of The information gathered over these last few
the domestic market. Beijing wants a competi- months will likely determine how the govern-
tive domestic market, not one dominated by the ment approaches crude imports for both private
private sector. and state players.
Rising domestic fuel supplies prompted the While it is unlikely that state refiners will
central government to launch a series of inspec- ever be saddled with import quotas, it may be
tions of Shandong Province independent refin- that greater transparency will be required in
ers in April. their reporting. The country’s bigger private
Reuters quoted unnamed industry sources refiners have had their eye on the lucrative
as saying at the time that the inspections export market and, with a greater apprecia-
focused on plants that had pledged to close tion of how the state-private refinery relation
ageing, inefficient facilities in return for interplays, this could become a possibility for
import quotas. They added that an audit of the biggest players.™

Week 24 17•June•2021 www. NEWSBASE .com P11