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Zhejiang Petroleum Trading set to secure China's crude import license

Singapore — Zhejiang Petroleum Trading Co. is set to become the first company with a foreign investment to win a crude oil import license in China, signaling the country further opening up its oil industry.

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The Ministry of Commerce, or MOFCOM, said in a statement late Tuesday that Zhejiang Petroleum Trading in eastern China's Zhejiang Free Trade Zone meets the requirements to apply a license for importing crude oil.

The final approval will come after a public review, which could last until October 17.

With the license, Zhejiang Petroleum Trading will become the first company with a foreign investment to be allowed to import crude oil into China directly for refineries having permission to process imported barrels, Chinese policy observers said.

Zhejiang Petroleum Trading is a joint venture set up in April last year between Zhejiang Petroleum Co. Ltd., with a 71% stake, and the Singapore-based commodities trading house Glencore Asian Holding Pte. Ltd., owning the remaining 29%.

The company would also be the second non-state-owned trading firm to win the license in the Zhejiang Free Trade Zone, following China granting it to Zhejiang Material Industrial Zhongda Petroleum Ltd. in March.

LICENSE TO ZPC

Separately, MOFCOM is set to award a crude oil import license to the new greenfield independent refinery Zhejiang Petrochemical & Chemical Co. Ltd. in the same region after a public review ending on October 14, the ministry said in a second statement late Tuesday.

The license will enable the 400,00 b/d refinery to import crude directly, rather than asking a license holder -- either a trading company or a refinery -- to import on its behalf.

Without the license, the refinery is more likely to import through its indirect subsidiary Zhejiang Petroleum Trading. ZPC is a stakeholder of Zhejiang Petroleum, Zhejiang Petroleum Trading's parent company.

Taking into account a pending approval for ZPC, the ministry has granted a total of 33 refineries the crude import license since August 2015, when China began allowing independent refineries to directly import crude.

ZPC has been approved with a crude quota of 20 million mt/year by the country's top economic planner, the National Development and Reform Commission.

The refinery is expected to start full operations in Q4.

-- Analyst Oceana Zhou, oceana.zhou@spglobal.com

-- Edited by Manish Parashar, manishparashar@spglobal.com