Bigger Access to Import Crude Oil

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  In the past, only the state-owned Chinese oil enterprises are authorized to import crude oil from abroad. This affected the development of private oil companies in China. The relevant association asked for releasing this restriction.
  
  Before the start of the National People’s Congress (on March 3) and the Chinese People’s Political Consultative Conference (on March 5), the All-China Federation of Industry & Commerce (ACFIC) proposed that permission of importing crude oil should be given to some private oil companies and the local oil refinery enterprises should be allowed to import crude oil for their own use.
  Right now, only five state-owned oil enterprises in China have the authorization to import the crude oil based on the market demand without any limitation on the volume.
  The ACFIC proposed the diversification of the crude oil importers, which means that some private oil companies should be allowed to attend overseas inquiry and crude oil importation. The ACFIC and related commercial associations shortlists the oil companies according to their capital amount, processing capability, conditions of energy saving and other criteria.
  As promised when joining into the World Trade Organization in 2002, China began to allow trade quotas for the non-state-owned oil companies and the quotas increased by 15% year on year till the government restriction was cancelled.
  But the Chinese government simultaneously stipulated that the crude oil gained by the non-state-owned enterprises through trade quotas should only be sold to the refinery factories of China National Petroleum Corporation (CNPC) and China National Petrochemical Corporation (Sinopec) for refinery. The local private oil refineries were derived from the access.
  The trade quotas in 2010 for the non-state-owned oil enterprises are only 25.3 million tons, accounting for 13% of the total imported volume in 2009. Meanwhile, most of the local oil refineries can not get enough crude oil to start their production and their equipments are put aside idly.
  Lin Lin, director of the management department of the Oil Chamber of Commerce, ACFIC, said that the private oil enterprises will face the difficulties of importing crude oil alone even if they are qualified and authorized to do this. This is because of China’s current policy, which is that the companies beyond the systems of CNPC and Sinopec should possess the testimony of “production arrangement” from CNPC and Sinopec when importing crude oil; otherwise the customs can not give passport to the oil.
  “For the non-state-owned oil companies having got the quotas, the crude oil they can get could only bring them nothing but the price difference when they sell the oil to CNPC and Sinopec,” said Lin Lin.
  The local oil refineries have three ways to get the crude oil for their processing: the first one is the quoted oil within the national plan, whose amount could not meet one fifth of its demand; the second one is the fuel oil from Asia and Russia whose processing cost and tax burden are quite heavy; the third one is the collection of the crude oil from the dispersed oil well located outside the central area of the main oil fields.
  According to the statistics, there had been 99 local oil refineries by the end of 2008, accounting for 45% of the total number in China.
  “The restrictions on importing and processing crude oil for the non-state-owned enterprises should be released. This is good for the balanced and healthy development of the whole oil refinery industry in China,” said Lin Lin.
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