China May Give ‘Teapot’ Oil Refineries More Crude Import Quotas

China’s smaller, independent oil refineries known as teapots may be granted more import licenses this year, a government research official said.

The plants may be allowed to import as much as an additional 20 million metric tons a year of crude, or about 400,000 barrels a day, under the new quotas, Jiang Xinmin, a deputy director at the Energy Research Institute of China’s National Development and Reform Commission, the top economic planner, said today in Shanghai.

In late 2012, the country first allowed China National Chemical Corp., or ChemChina, to import as much as 10 million tons a year of crude to supply its teapot plants. China wants to break the dominance of China Petroleum & Chemical Corp. (386) and PetroChina Co. (857), its two biggest refiners, by allowing teapots to import crude as an alternative feedstock to fuel oil.

“China will further open up its energy import and export market in an orderly manner,” Jiang said. “Teapot refineries that meet the government’s requirement for operation size and environment regulation may get crude import quota.”

New quotas may be granted to teapots owned by ChemChina as well as other plants, Jiang said, without elaborating. The plants also use fuel oil to make gasoline and diesel because of their limited access to crude.

Crude accounts for 64 percent of teapots’ feedstock, said Ding Shaoheng, an engineer with China Petroleum & Petrochemical Engineering Institute. The plants, mainly in eastern China’s Shandong province, had a combined annual capacity of 164 million tons as of last year, Ding said.

To contact Bloomberg News staff for this story: Jing Yang in Shanghai at jyang251@bloomberg.net

To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Mike Anderson, Ramsey Al-Rikabi

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