On Thursday, sources with knowledge on the matter said that Beijing has granted a license to export refined oil products to a private company Zhejiang Petroleum & Chemical Co (ZPC). The license was the first of a non-state oil company.
Under the license, ZPC is allowed to export directly oil products to alleviate the oversupply pressure in China’s domestic market, competing against state-owned refiners. However, ZPC still needs to wait for the allocated quota before it could start exporting.
Earlier in 2020, ZPC gained a quota of 1 million tonnes of very low sulfur fuel oil (VLSFO) to export via state-run firms as proxies. The attainment followed China’s state council decision to grant refined oil products’ export quotas to private companies in the Zhejiang free trade zone (FTZ), which was created in 2017 to spur oil and gas trading.
Analyst Wang Zhao of Sublime Information Corp. opined that it is highly unlikely that Beijing would permit other independent refiners to obtain export licenses. ZPC was an exception as its refinery is located in Zhousan bunker port city in eastern Zhejiang, in the FTZ, which has special policies.
At the moment, only several big state-run Chinese refiners are permitted to export refined products. Those firms include Sinopec, CNPC, CNOOC, Sinochem Group, and China National Aviation Fuel Company.
