China's 1st round of crude oil import quotas 18% higher on year

SINGAPORE/BEIJING: China has issued the first batch of crude oil import quotas for non-state companies at 122.59 million tonnes in 2021, two sources with knowledge of the matter said on Monday, up 18% from the first round for 2020.

The increase follows the launch of new refining facilities such as the Zhejiang Petrochemical Corp (ZPC) plant in the eastern port city of Zhoushan. The ZPC plant last month started operations at a 200,000 barrel per day (bpd) crude processing unit.

Beijing had said in early November that it would raise the non-state crude oil imports quota for 2021 by 20% to 243 million tonnes.

Both Hengli Petrochemical, which has 400,000 bpd of refining capacity, and ZPC have received the biggest quotas among the 56 firms in the first round, at 14 million tonnes each, the sources said.

"Large new integrated refineries will still be the main driver for the growth of Chinese crude demand," said Liu Yuntao, analyst at Energy Aspects.

Liu added that he also expected smaller "teapot" plants to stock up in the first half of 2021, anticipating higher oil prices in the second half.

Yuhuang Chemical in the Shandong refining hub was granted 720,000 tonnes in 2020 but has not received a new quota for 2021 because it has shut down refining units as part of Shandong's efforts to create a giant oil complex.

China's Ministry of Commerce, in charge of quota allotments, did not respond to a request for comment.

Forty-four of the 56 firms are independent refiners, while the rest are traders, with the latter allotted about 4.5 million tonnes.

ZPC is expected to launch another 200,000 bpd crude processing unit in the second quarter of 2021, while Shenghong Petrochemical and Hebei Xinhai are expected to start operation of their new facilities - 320,000 bpd and 160,000 bpd respectively - by the end of 2021.