China's National Energy Administration is seeking recommendations and consulting the refining sector on a proposal to award more crude import quotas in the country.
In a report on Friday, Chinese newspaper 21st Century Business Herald said it had obtained a document from the NEA which proposed giving more domestic refineries the right to use imported crude in future.
Refineries, including non-state owned facilities, wanting to apply for import quotas must have minimum primary processing capacity of 5 million mt/year (about 100,000 b/d), including a single cracking unit of at least 3 million mt/year, the report said.
In addition, these refineries must have at least 3 million mt/year of secondary processing capacity and other ancillary processing capacity of minimum 4 million mt/year, along with supporting facilities such as docks, pipelines and storage tanks.
In addition, applicants are also required to have licenses to operate wholesale oil product businesses and have a good record of production and sales. These refiners also should have an asset-liability ratio of under 70%, the report said.
Applicants also need to maintain their utilization rates at above 50%, with a light products yield of over 65%. Their hydrogenation units must also be at least 35% of capacity while the operational cycle of the refineries' major refining units has to exceed 8,000 hours a year.
NEW CRUDE QUOTAS YET TO BE AWARDED
The development comes after speculation and numerous reports that a number of independent refiners in eastern Shandong province have been granted new crude import quotas. Sources however told Platts this was not true.
Four refineries in eastern Shandong province had applied to the government for crude import quotas, Platts reported last month. They are Shandong Dongming Petrochemical, Sinochem Hongrun Petrochemical, Shandong Lijin Petrochemical and Shandong Haihua Group.
A source in charge of crude procurement at Shandong Dongming on Monday denied reports that it had received approval for its crude import license.
"All the reports are false. We have not heard anything and we only expect to hear from the government early next year," he said.
Shandong Dongming has cracking capacity of 10 million mt/year although the source declined to say how big a crude quota it has sought from the government.
The National Development and Reform Commission, which oversees the NEA, had started conducting a survey of domestic refineries in late September to ensure they adhere to fuel quality upgrades. Other market sources said the crude import quotas were not likely to be approved before the end of this survey.
Another source with Sinochem also denied that its affiliate, Hongrun Petrochemical, had obtained the government's approval for the import quota when contacted by Platts last Friday.
The refinery submitted an application for a 5 million mt/year crude import quota last month.
State-owned China National Chemical Corporation, or ChemChina, was granted a 10 million mt/year (200,822 b/d) quota for imported crude at the end of 2012. The company started utilizing the quota in April this year, sparking speculation that the government would approve more quotas allowing more refineries to source their own crude.
