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China’s refining sector policy timeline

China's oil sector policy update

by Oceana Zhou and Mriganka Jaipuriyar

S&P Global Platts has detailed below a timeline of China’s refining sector policy.


  • China allows independent or "teapot" refiners to start processing imported crude oil. Some refiners allowed to import crude directly as long as they met certain conditions.
  • Main condition focuses on the abolition of crude distillation units that have a capacity of under 2 million mt/year (40,000 b/d), as they were deemed too small and inefficient. Refiners encouraged to close even larger CDUs with the promise of additional crude import quotas.
  • By year end, a total of 34.11 million mt/year (685,000 b/d) of capacity is committed to shut.
  • Eleven refiners allowed to import 49.19 million mt/year (987,000 b/d) of crude.


  • The number of independent refiners allowed to import crude rises. By year end, 19 refiners are allowed to import 73.77 million mt/year (1.5 million b/d).
  • China's crude imports rise 13.3% to 7.63 million b/d in the year.
  • Processing rates at China's independent refiners averages 52.5% in 2016, compared with 41.4% in 2015.
  • Independent refiners given quotas to export refined products. China's product exports rise 50.3% year on year to 38.2 million mt.
  • Further capacity streamlined. Eight refiners promise to shut 20.81 million mt/year (418,000 b/d) of capacity to get 24.58 million mt/year (494,000 b/d) of import quotas. But illegal trade in quotas and tax evasion becomes rampant and pollution veers out of control.


  • Government clamps down on exports by independent refiners, who are given no quotas. Main reason is to control excessive operating rates and improve air quality.
  • More independent refiners allowed to import crude -- number rises to 32 at end 2017 and annual volume rises to 101.69 million mt/year (2.04 million b/d) with total 61.62 million mt/year (1.24 million b/d) of capacity committed to be completely shut.
  • Government puts in place more stringent checks and balances to ensure that all criteria are met before awarding import quotas.
  • Government stops accepting new crude import quota applications from existing refineries from May 1 to control imports and capacity expansions.
  • New refining projects approved. These include a 15 million mt/year refinery by independent Xuyang Petrochemical and 16 million mt/year plant by independent Shenghong Petrochemical, while a 15 million mt/year joint project between state-owned Norinco and Saudi Aramco comes back to life.
  • China's crude imports rise 10.5% to 8.43 million b/d, while oil products exports rise 7.3% on year.
  • Processing rates at independent refiners rise further to 60.2% in 2017.
  • More stringent environment and safety checks carried out. In Shandong, the checks force 10 key independent refiners with a combined capacity of 400,000 b/d to prolong maintenance, while several small refiners decide to suspend operations.
  • Government starts taking a closer look at the loopholes in its consumption tax governance and illegal trade in quotas. In August, 20 central government bodies ink MOU to tighten monitoring around the sector.


  • Government eases controls on crude imports and refined product exports, though independent refiners not yet given export quotas.
  • Government turns an environment-protection fee collected from companies into an environment tax, effective January 1.
  • The State Administration of Taxation announces tighter regulations for the oil products consumption tax in an effort to weed out players - independent refiners and oil blenders - who have managed to avoid paying the tax.
  • The National Development and Reform Commission unveils measures to punish refiners that fail to meet the government's guidelines on capacity expansions and environment and safety. Punishment includes outright closures of capacities under 2 million mt/year and of illegal expansions and refiners that are found to be flouting the guidelines.

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