The Chinese government will not issue new quotas for clean oil product exports and additional allowances for crude oil imports this year, three Beijing-based trading officials with knowledge of the matter said late Sept. 27.
According to the sources, a governor with the country’s top planner, the National Development Reform Commission, had said this during a meeting with state-run companies on Sept. 27, which will cap China’s oil product exports and crude inflows for the remainder of 2023.
A rumor was circulating in the market that China may allocate a fourth batch of export quotas for clean oil products, which would help Chinese oil companies to take advantage of hefty margins, spurred by Russia’s temporary export ban, to sell gasoil overseas.
With no additional quotas allocated, China’s average clean oil product exports will be in a downtrend as only about 11.81 million mt (770,000 b/d) of clean oil product export quotas will be available for September through the rest of the year, given that the government awarded 37.99 million mt (870,000b/d) of quotas for 2023.
In the first eight months of 2023, China exported 28.18 million mt, or around 920,000 b/d, of clean oil products consisting of gasoline, jet fuel, and gasoil, with volumes surging 72.3% from a year ago, General Administration of Customs data showed.
As for additional crude import quotas, the sources said the NDRC indicated that no more extra crude import quotas will be issued this year beyond the annual allocation ceiling for refining quota holders.
China’s qualified refineries, including privately-held complexes and small-sized independent plants, are hungry for the remainder of crude import quotas for 2023 as well as extra allowances to facilitate their respective crude procurement plans, S&P Global Commodity Insights reported Sept. 12.
Independent refineries that have used up their crude import quotas for 2023 would have to find alternative feedstocks for the remainder of the year. Some of these refineries, which had purchased extra barrels in the hope of receiving additional quotas, have had to place them in bonded storage.
In October 2022, the government issued the first batch of crude import quotas for 2023 at 19.93 million mt to aid international trade flow towards the end of the year.
Some independent refineries expected to receive an additional round of crude import quotas amounting to about 27.36 million mt around September or early October, like what had happened in 2022.
However, the remaining 10.45 million mt of quotas for 15 refineries will be issued up to their annual ceilings, refining sources said, while the greenfield Yulong Petrochemical will receive quotas to bring in crude barrels for trial runs by year-end.
The government allocated 171.06 million mt of crude import quotas in 2023, accounting for 94.2% of the refineries’ annual quota ceiling of 181.50 million mt, S&P Global data showed.
China imported 11.42 million b/d of crude over January-August, up 14.7% year on year, the GAC data showed.
Source: Hellenic Shipping News
