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China Grants Zheijang First Private Fuel Export License

July 9, 2020

Image by Grispb/AdobeStock

China has granted Zhejiang Petroleum & Chemical Co (ZPC) a license to export refined oil products, making it the first private oil refiner to win such permission, two sources with knowledge of the matter said on Thursday.

The license would allow ZPC to directly sell oil products to the international market, competing against state-owned refiners and helping to ease oversupply pressure in China's domestic market.

However, the refiner will still need to be granted a government quota that will determine the size of its exports before it can begin shipments, said one of the sources.

Presently, only a handful of large state-owned Chinese refiners, including Sinopec, CNPC, CNOOC, Sinochem Group and China National Aviation Fuel Company, are allowed to export refined products.

Independent refiners have long lobbied the government to allow them to directly export refined fuel.

"It's unlikely that other independent refiners will acquire export licenses. ZPC is an exception, as it is located in a free trade zone, which has special policy," said Wang Zhao, oil analyst at China-based Sublime Information Corp.

China set up a trade zone in bunker port city Zhoushan in eastern Zhejiang province in 2017 to boost oil and gas trading.

Earlier this year, ZPC, whose 400,000-bpd refinery is located in Zhoushan, was allotted a quota of one million tonnes to export very low sulphur fuel oil (VLSFO) via state-run companies as proxies, after China's state council said in March that it will grant export quotas for refined oil products to non-state refineries in the Zhejiang free trade zone.

In 2016, the government temporarily gave oil product export quotas of 1.675 million tonnes to 12 Shandong-based private refineries.

Reuters could not immediately reach ZPC for comment.

The Ministry of Commerce did not immediately respond to a request for a comment.

(Reporting by Shu Zhang and Chen Aizhu in Singapore and Muyu Xu in Beijing; Editing by Richard Pullin and Kim Coghill)

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