August 28, 2017 / 11:11 AM / a year ago

China to penalize refineries for crude reselling, unauthorized expansion

BEIJING (Reuters) - Chinese refineries newly allowed to import crude oil will be penalized for reselling crude oil or expanding capacities without approvals, according to a policy document issued by the National Development & Reform Commission (NDRC) on Monday.

Qualifications will be stripped and trade permits revoked for the refineries that recently were allowed to use or import crude oil if they are caught in these violations, the NDRC said in a 38-page document that also covers exploration and storage.

Experts said the policy to crackdown on these violations is not new but the government was reaffirming the penalties amid growing concerns that abuses are getting more widespread.

“The government realizes that the oversight is lacking as some companies have abused the quota policy,” said Lin Boqiang, an energy expert with Xiamen University.

That is also one of the reasons why the government issued a deadline for applying for new crude oil quotas, Lin said.

China has since late 2015 allowed about 31 companies, mostly privately-run refineries, to import crude oil in an unprecedented liberalization of China’s oil market, the world’s second-largest after the United States.

“Companies that fail to remove obsolete facilities as they promised they would, companies which add or expand refining capacities without approval, companies that resell crude oil without a license ... will be blacklisted,” the NDRC said.

Qualifications will also be stripped from companies that were granted “non-state” oil import quotas but have not conducted any imports over the past three years, it added.

Reporting by Chen Aizhu

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