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China capable of exporting 60 mil mt oil products in 2020: Sinopec

Shanghai — China will be able to export 60 million mt of oil products in 2020 as domestic demand growth will lag behind capacity expansion, Vice President of the Economics & Development Research Institute under Sinopec Yu Jiao said at the Seventh China International Oil and Gas Trade Congress in Shanghai Friday.

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This will be about 13% of Chinese output by then as total refining capacity will hit 890 million mt a year in 2020, with independent refineries accounting for about a third, she said.

She expects China to export around 46 million mt of oil products in 2018.

So far this year, the country has allocated a total of 45.93 million mt of quotas for oil products, with another 70,000 mt expected to be allocated soon for jet fuel, according to market sources.

In 2019, Yu expects total exports to be around 50 million-51 million mt, she added.

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In contrast to the increase in output brought about by greater capacity, the growth in demand for oil products will continue to slow, especially for gasoline. Ethanol use will also push more gasoline onto the export market, she added.

"The supply of oil products will be in surplus in the coming years, pushing more to overseas markets," she said.

Jet fuel exports will continue to be boosted by the increasing output by the new greenfield refineries.

"Sales of jet fuel are relatively restricted on the domestic market as pipeline infrastructure, which is crucial to its marketing, is not in place yet, but the new greenfield refineries continue to add more jet fuel to the market," Yu said on the sidelines of the conference.

The 20 million mt/year Hengli Petrochemical, which aims to start trial operations in early December, is designed to produce about 3.7 million mt/year of jet fuel, about 40% of its total combined output of gasoline, gasoil and jet fuel. This is about the same output expected from the 20 million mt/year Zhejiang Petrochemical refinery, which plans to start operation early next year.

This additional jet fuel output will probably have to be exported because of limited domestic outlets, she added.

Gasoil exports will be driven by new regulations on bunker fuel, which will require some gasoil to be blended into fuel oil to reduce the sulfur content, Yu said.

She believes gasoil exports will be around 3 million-5 million mt in 2020.

China exported 5 million mt of gasoil, gasoline and jet fuel over January-September, up 23% year on year.

--Oceana Zhou,

--Edited by Jonathan Dart,