Feb. 27 (Bloomberg) -- China National Chemical Corp. bought a cargo of Angola crude for March delivery to feed its smaller refineries under the country’s first allowance for processing imported oil at so-called teapot plants, according to four people with knowledge of the purchase.
The first cargo of 1 million barrels of Saturno crude will arrive in Qingdao in eastern China’s Shandong province on March 18, said one of the people, declining to be named because the information is confidential. The buyer, known as ChemChina, is nation’s largest chemical producer.
Teapot facilities, generally smaller refineries located in Shandong, are run at lower rates compared with other plants owned by state-owned PetroChina Co. and China Petroleum & Chemical Corp. The teapots mainly process fuel oil into gasoline and diesel because they have limited access to domestic crude and were traditionally banned from refining imported oil.
The teapot plants under state-owned ChemChina won the quota to process 10 million tons of imported crude, which will reduce their need for fuel oil.
The access to overseas crude may reduce the facilities’ imports of fuel oil to 2 million to 3 million metric tons this year from more than 4 million tons in 2012, one of the people said. The company’s total oil-processing volume may rise to as much as 16 million tons from about 10 million tons last year.
ChemChina bought Angola Saturno from Brightoil Petroleum Holdings Ltd., the people said. The new grade is relatively inexpensive while matching the configuration of the teapot plants, and the company is in talks to buy more crude cargoes, said one of the people, declining to elaborate.
The company bought the cargo through China National Offshore Oil Corp., which has experience in purchasing crude via global markets, three of the people said. The cargo was co-loaded with other supplies on a vessel chartered by China International United Petroleum & Chemical Corp, they said. China International, known as Unipec, is the nation’s largest oil trader.
Zhou Chuanrong, the Beijing-based spokesman for ChemChina, declined to comment today on the purchases. ChemChina’s annual oil-processing capacity is about 25 million tons a year, or about 500,000 barrels a day, according to the company’s website.
China’s teapot refineries, which account for a quarter of the nation’s total refining capacity, import about 10 million tons of fuel oil as feedstock on an annual basis, according to the Shandong Fuel Oil Association. The country’s total residue imports were 26.88 million tons last year, according to Chinese customs data.
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