China allocates 26.79 mil mt of crude import quotas to 16 refineries

China's Ministry of Commerce has allocated the third batch of crude import quotas, totaling 26.79 million mt, to 16 qualified refineries, sources told S&P Global Platts on July 9.

The Ministry of Commerce, MOFCOM, issued 26.79 million mt (196.37 million barrels) of crude import quotas on July 9 to 15 qualified independent refineries and the non-major state-owned ChemChina, in the third batch for 2020.

The allocation significantly helps the 16 refineries to ease their quota shortage, sources said.

"With the newly issued quotas, we are now able to carry on with our plan to bring in imported crudes," said one source with a Dongying-based independent refinery.

The refinery has not been awarded any quota in the second batch, so it will have to put some of its cargoes into bonded storage first while awaiting a quota allocation.

MOFCOM in May did not issue any quota to 13 refineries in the second batch allocation, making it difficult for those refineries to bring in crude with tight quota availability.

In China, refineries built and operated by state-owned companies -- Sinopec, PetroChina, CNOOC and Sinochem -- do not need quotas to import crude. All other refineries, including independents and those owned and operated by state-owned companies such as ChemChina and Norinco, require quotas to refine imported crude.

ENOUGH QUOTAS

The new allocations bring the crude quotas awarded to 44 qualified refineries to 179.40 million mt for 2020, accounting for 99% of these refineries' annual quota ceiling.

Over the January-June period, China's independent refineries have imported about 87.5 million mt of crude, leaving 91.9 million mt, or 15.3 million mt/month, of quotas unused over July-December, according to S&P Global Platts data.

The refineries' monthly crude oil imports have averaged 14.6 million mt so far this year, despite May imports hitting an all-time high of 18.71 million mt.

Among the 44 refineries, Fuhaichuang, previously known as Dragon Aromatics, is the only company that has not got enough quota to hit 100% of its annual quota ceiling quota.

It received 1.9 million mt of quota in this round to lift the total quota for 2020 to 3.5 million mt, compared with its annual quota ceiling at 4 million mt.

Meanwhile, Baota remained out of the quota allocation list, making it the only company that has not been awarded any quota in 2020.

It is unclear if there is an additional batch of quota allocation for these two companies.

China's 3rd batch import crude quotas for qualified refineries ('000 mt)

Source: Refining sources