China's top economic planner plans to grant crude oil import quotas to two independent refineries, Chengda New Energy and Kelida Petrochemical, both in eastern Shandong province, for a total of 3.6 million mt/year, China Petroleum and Chemical Industry Federation, which reviews quota applications, said recently.
The government regulates China's crude imports, but CPCIF, which is not affiliated to the government, has been appointed to review documentation and make site visits as part of the application review process for crude import quota allocations. The quotas are subsequently approved by the National Development and Reform Commission and granted by the Ministry of Commerce.
CPCIF conducted on-site inspection at those two refineries over March 12-15, and is seeking public feedback by May 8 regarding the quota allocation. The 3 million mt/year (60,000 b/d) Chengda New Energy plans to mothball two crude distillation units totaling 2.1 million mt/year in order to get the quotas, while the 2.2 million mt/year Kelida plans to mothball three CDUs totaling 1.5 million mt/year to get the equivalent amount of quotas.
NDRC, China's top economic planner, in 2015 issued a policy allowing independent refineries to process imported crude. The criteria for being allocated a quota to import crude requires independent refiners to get rid of smaller CDUs, with the mothballed capacity to correspond with the quota volume to be awarded. Quotas will ultimately not exceed each individual refinery's remaining capacity.
So far this year, China has approved 36 independent refineries to process a total of 104.29 million mt/year imported crude.
On top of those independent refineries that need to phase out outdated capacity as a condition to receive crude import quotas, two newly built refineries have already gained approval for a combined 40 million mt/year, because the projects meet China's development guideline for the petrochemical industry.
Those include Hengli Petrochemical in Liaoning and Zhejiang Petrochemical in Zhejiang, which are targeting trial operations in October and September, respectively.
China's independent refiners are mainly concentrated in the eastern Shandong province, though a few are located in the north and south. They are estimated to have a total crude processing capacity of 5.436 million b/d, accounting for around 34% of China's total processing capacity of 15.882 million b/d, according to data from S&P Global Platts Analytics.
Those independent refineries have imported 26.74 million mt of crude in the first quarter, up 6.1% year on year, according to Platts survey. This accounts for about 23.9% of China's total crude imports of 112.07 million mt in the same period.
Before 2015, the independent refineries each had an average capacity of 40,000-50,000 b/d. But they have since revamped their plants in order to win crude import quotas and today have an average capacity of 70,000 b/d.
These refineries were not built by the state-owned majors such as Sinopec, PetroChina, CNOOC and Sinochem. CNOOC and Sinochem have, however, later acquired stakes in some of these refineries.
