Chinese growth of crude oil imports may likely shrink by more than 60 percent next year, as storage facilities are filling in and smaller refiners face more scrutiny over taxes and licenses, according to a Bloomberg survey of analysts.
According to Energy Aspects analyst Michal Meidan, Chinese crude oil imports are expected to grow by 5 to 9 percent in 2017, compared to an estimated growth of 11 to 14 percent this year.
According to customs data quoted by Bloomberg, Chinese imports increased by 14 percent to average 7.5 million bpd between January and November this year. The median estimate of 8 analysts in the survey showed that China would increase oil purchases by 4.8 percent on the year in 2017.
In addition, China has been bumping up crude oil imports while port and pipeline infrastructure has not been keeping up with development fast enough, which could also reduce the growth of imports.
For the small refiners, the so-called ‘teapots’, they are allocated import quotas to which they need to stick to. As of October of this year, 17 teapots had been allocated a combined quota of 1.35 million bpd for 2016, while a dozen other small refiners are in the process of being approved.
According to Pang Guanglian, deputy secretary general of the China Petroleum and Chemical Industry Federation—one of the associations reviewing import quotas—the amount of additional new quotas for private refiners could fall “significantly” next year compared to this year, Bloomberg said.
A few months ago, the Chinese authorities announced an attempt to impose stricter control on taxes paid by independent refineries. According to a Platts analysis, this might potentially result in slowed short-term crude import plans, although it was unlikely to lead to substantial impacts in the longer run.