China’s cabinet has decided to further pursue a policy to allow eligible private refineries to export refined oil products, reported Caixin.
The decision, which came in the form of policy guidelines, highlights how the country is grappling with overcapacity in its oil refining market that has taken a toll on the industry’s bottom line. In the first half of 2019, the average profit from processing a ton of crude oil in China fell by 32% year-on-year to RMB 129 ($18.41), the lowest in five years, according to data from the China Petroleum and Chemical Industry Federation.
The guidelines are the first policy document to clearly state that private refiners could be eligible to export their products, though temporary export quotas were granted to certain private firms on trial basis between 2015 and 2016.
The policy aims to open the overseas market to more competition by removing barriers that prevent private companies from participating, according to officials from the National Development and Reform Commission, China’s top economic planner.