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Chinese teapot refiner Dongming takes first crude cargo under import quota

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Chinese teapot refiner Dongming Petrochemical has received the first crude cargo under its recently awarded import quota -- a 270,000-mt parcel of Oman crude, a company source said Thursday.

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The refiner on July 13 was granted a final crude import quota of 6 million mt/year (120,493 b/d) by China's Ministry of Commerce.

The final quota allotted was less than the 7.5 million mt/year that the National Development and Reform Commission had approved earlier this month. The reason for the difference was not immediately clear.

The crude import quota is part of a broader plan by Beijing unveiled earlier this year to allow teapot refiners -- small independent plants with capacities ranging from 20,000 b/d to 100,000 b/d -- to run imported crudes as long as they met certain criteria.


China tightly controls crude imports and only a handful of state-owned trading companies enjoy the right to import crude oil.

Though teapot refiners are now being granted the right to use imported crudes, they will still have to rely on the state-owned trading companies to carry out the imports for them.

TO TAKE SECOND CARGO NEXT MONTH

The cargo of Oman crude reached the Rizhao port of Shandong on Tuesday, the refinery source said.

The cargo was imported by ChinaOil, trading arm of state-owned PetroChina, a ChinaOil source said.

The refinery will bring in a second cargo in August, sources said.

China's uptake of Oman crude has been rising steadily in recent years.

The country accounted for 90% of Oman's overall crude exports of 912,015 b/d in June, latest data released by Oman's oil and gas ministry showed.

In April during the Platts Market on Close assessment process, ChinaOil purchased 49 cargoes of June-loading Oman crude, each 500,000 barrels, equating to 816,000 b/d. Of these stems, the vast majority ended up loaded onto VLCCs and sent to China.

Heze-based Dongming Petrochemical is the largest independent teapot refiner in the eastern Shandong province -- home to most of China's teapot refiners. It operates a 7.5 million mt/year plant.

Though this is Dongming's first crude import under the new quota system, the refiner has processed imported grades before under its strategic alliance with state-owned PetroChina.

Around 50% of Dongming's feedstock was Venezuelan Merey crude. It has also processed Middle Eastern crudes and also Russian ESPO and Angolan grades. The refinery also processes some Venezuelan 380 CST straight-run fuel oil, which accounts for around 20% of its total feedstock.

According to a ChinaOil source, the cargo Dongming took delivery of this month was a regular Oman grade that it had processed before.

--Analysis by Daisy Xu
--Edited by Mriganka Jaipuriyar, mriganka.jaipuriyar@platts.com with Haripriya Banerjee, haripriya.banerjee@platts.com