Others News
- Private oil firms eye crude imports
Date: 23-Mar-2007 Sources: (Shenzhen Daily)
THE private oil sector has called on the government to free up part of the State-dominated crude oil market, a few months after the government started opening up the domestic distribution sector.
China Chamber of Commerce for Petroleum Industry (CCPI), representing hundreds of small retailers and simple 'teapot?refineries, lobbied the government to allow them access to about 20 percent of China's total crude imports, CCPI's vice chairman Qi Fang told an oil seminar.
Teapots, locally or privately owned refineries with unsophisticated processing facilities, have been shut off from crude supplies, both domestically produced and imported.
Yet they have survived and flourished by refining imported fuel oil.
CCPI's proposal called for some 600,000 barrels per day of crude imports to be traded in the open market and so be available to independents.
The volume, brought in under the category of non-State import quotas, currently all ends up in big plants under the country's twin energy giants Sinopec Corp. and PetroChina, as importers are not allowed to sell to a third company.
'We called for the government to open up supply channels to independents, to reform the domestic oil distribution system,'Qi Fang told an industry forum organized by Guangdong Oil and Gas Association on Wednesday.
The government started opening up the oil wholesale business from Jan. 1, a commitment it made on becoming a World Trade Organization member five years ago.
But the government has set a high threshold for entry into the market, such as sizable storage capacity and existing fuel supply contracts, effectively blocking smaller aspirants.
'Where is the market when one cannot buy crude or refined products??said Qi.
The oil duopoly controls nearly all China's onshore oil fields and dominates import business of both crude and the main transport fuels: diesel and gasoline.
A few years ago, the government allowed in about a dozen new crude importers as non-State traders, most of them affiliates of the State giants, but required they sell crude only to Sinopec or PetroChina.
Despite the rigid supply curbs, China's teapot refineries have mushroomed to claim up to 20 percent of China's 7 million barrels per day refining capacity, by processing fuel oil from Russia, Iran and South Korea, or heavy, tar-like orimulsion fuel from Venezuela.
East China's Shandong Province, a region with nearly half of the national teapot capacity, and the northwestern province of Shaanxi, have become two leading fuel suppliers challenging the duopoly.
'Their processing capacity can no longer be ignored. Whenever there is a shortage in the market, they are the key swing suppliers,'said Zhang Shiru of Shandong Chamber of Commerce for Petroleum and Clean Fuel.
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