Change in Chinas Refining Regulations to Help Small Refiners

Published By : 05 Aug 2015 | Published By : QYRESEARCH

The government of China recently changed its rules regarding export and import of petroleum products and crude oil. The recent change will restrict gasoline and jet fuel exports, but encourage double export of diesel in terms of volume. This would mean that the shipping of refined products from China will reach 589,000 barrels a day, making the country reach the sixth position in the world. This statistic was published by Organisation of Petroleum Exporting Countries’ in its Annual Statistical Bulletin 2015.

The reason for doubling diesel exports is excess of produce lying with refiners which is currently not being used in the domestic market due to slower growth rate. 

In the larger picture, China uses 11 million barrel per day of petroleum products as compared to its crude throughput capacity of over 14 million barrel per day. Despite slowing down operations China is producing far more diesel than what is needed. This has presented the country with an opportunity for exporting diesel.

The change in regulation for the crude oil will allow smaller refineries to import crude oil. The small refiners, which are locally called teapots, have collectively acquired a huge share of 20% in China’s refining capacity as a whole. 

Some of these plants were making about a few hundred barrels a day. The main products of these plants are fuel oil that is serviced just to the local market. For several years, the authorities in China have tried to ban these refineries as due to their unsafe and unhealthy functioning. The authorities over the year have also insisted that the refining network must work toward improving their efficiency.
Back To Top