Storm in a teapot: China’s small oil refineries brew big plans for crude imports
Small refineries becoming increasingly important players in nation’s energy market after government allowed them to buy in high levels of overseas oil
Few paid attention just over two months ago when 16 so-called teapot refineries came together in Jinan to announce to the world that they had formed the China Petroleum Purchase Federation of Independent Refineries.
There was such a lack of media interest in the event in the second-tier city about 500km south of Beijing that just one non-Chinese news outlet was represented on February 29, according to photos on the organiser’s website.
Now the federation and its members are making a splash on the international oil market by buying crude at a startling rate. Oil imports by Shandong province, where most of China’s private refineries are based, surged 303.1 per cent in the first quarter from a year earlier by value, according to the local government data. That’s despite a 37 per cent drop in the price of imported crude.
China sets new rules to allow more refiners to import oil
Amid slowing domestic economic growth, China’s teapot, or smaller, refineries drove up the country’s overall crude imports by 13.4 per cent by volume in the first quarter to 91.1 million tonnes, making the March figures the second-highest on record.
And there are no signs of the tide turning, with 83 supertankers bound for Chinese ports, a 16-month high, at end April, according to a Bloomberg report.
All private refineries that can import crude are rushing to buy and a kind of crude fever in the industry is spreading
Bai Jun, a deputy director with an energy research institution affiliated with the National Development and Reform Commission, said China’s independent refineries were now a new force in the crude and oil market.
“Their imports are still small compared to Sinopec or PetroChina, but their influence shouldn’t be neglected,” Bai said.