BEIJING: China National Offshore Oil Company (CNOOC) has won government approval for a special permit to export refined fuels free of tax, as Beijing injects a small measure of competition into a market dominated by two other state giants, the company and traders said.
CNOOC, parent of China's top offshore oil producer CNOOC Ltd , may now apply for a quota to export a total of 400,000 to 500,000 tonnes of fuel for the first year, most likely of aviation fuel and diesel, two traders said.
The special trade permit, approved in early March by China's cabinet, or State Council, allows CNOOC to import crude oil and export a specified volume of refined fuel under a "processing deal", exempt from value-added tax and consumption tax.
The scheme covers most of China's exports of refined fuel in order to make the process economically workable, traders said.
It's a hard-won permit for CNOOC, which first applied for one at the start of 2010.
"Due to policy restrictions and diesel supply squeezes during the subsequent three years, our permit has had some setbacks," CNOOC said on its website.
State-run Sinochem Corp, which started test operations in January at its first wholly-owned refinery in Fujian, may follow suit, traders said. "This is very good news.
Sinochem will surely be the next to apply for a similar permit," said a Sinochem trader, who declined to be identified because of the sensitivity of the topic. CNOOC's new permit covers only its Huizhou refinery, a 240,000-bpd plant in the southern province of Guangdong started in 2009.
So far such permits have been given only to Sinopec Corp , Asia's biggest oil refiner, and PetroChina, the country's largest oil and gas producer, although their total annual exports are also subject to Beijing's control, so as to ensure domestic supplies are sufficient.
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