Published on : Jul 23, 2015
China is increasingly relaxing the restrictions that allow companies in the country to import oil, a strategy that may solidify China’s spot as world’s largest importer of oil, surpassing the current top importer, the U.S.
The relaxed set of conditions will allow more oil refiners in the country to apply for licences needed for importing crude oil, said the ministry of commerce of the country on Thursday. The decision again shows how the government is losing control on the country’s oil sector, which is long dominated by companies that are mostly state owned.
According to the new set of regulations, companies that meet certain capacity and environmental requirements can apply for licenses needed for oil imports, stated the ministry in a statement on its official website.
Independent oil refineries in the country, called teapots, will be able to directly purchase crude oil in the international crude oil market. it is the latest step in the rapidly deregulating business that was limited to state-owned oil processing companies or trading companies that were required to sell oil to the state-owned ones, only less than a year ago.
Liu Aiying, President of the association representing independent refiners, Shandong Oil Refining Association, said that this is the first time in China that the non-state oil refineries have been offered importing licenses.
There were some privately owned refineries in the past that were given the right of importing crude oil from the international market but not many used them as they had to sell it to state-owned refineries.
The new set of rules released today is built upon an earlier opening by the country’s regulators in February. The opening came in the form of licenses to five independent oil refiners to process imported crude oil, but not allowing them to import it directly.