Beijing has allocated 2.5 million mt, or 15.88 million barrels, of low sulfur fuel oil export quotas in the third round for bonded bunkering in 2022, down 16.7% from the same round for 2021, sources with knowledge of the matter said July 6, says an article published in SPGlobal.
LSFO
However the new allocation brings total fuel oil export quotas in the first three rounds for the year to 12.25 million mt, up 11.4% from the same batches in 2021.
Beijing encourages bonded LSFO bunkering as it supplies cleaner fuel, and market sources had expected total annual quotas for 2022 to be higher than the 12 million mt allocated last year.
The quotas help supply tax-free domestically-produced LSFO for bonded bunkering at Chinese ports, but do not permit fuel oil cargo exports, which attract taxes.
With the three rounds of allocations, Sinopec gains 1.37 million mt of new quotas to become the top quota holder with 7.02 million mt of allowance to date this year, up 10% from the three rounds in 2021.
However, the quotas held by Sinochem and Zhejiang Petroleum & Chemical slumped 84.4% and 64.1% on the year, respectively, according to the sources.
In the same round of allocation, Beijing issued 5 million mt, or 39.75 million barrels, of quotas for exporting gasoline, gasoil and jet fuel in 2022, indicating tight outflows in the third quarter, according the sources.
The new allocation takes the total quota volume to 22.5 million mt thus far for 2022, 40.2% lower than the 37.61 million mt awarded in the three batches of 2021, data from S&P Global showed.
The government issued only three batch of quota for gasoline, gasoil and jet fuel in 2021.
The current batch is shared by seven quota holders, with the deepest year-on-year reductions seen for the oil giants CNPC, Sinopec and CNOOC.
Beijing is keen to cut the country’s oil product exports to ensure domestic supplies when crude prices fluctuate at high levels, S&P Global reported earlier.
China’s oil product exports collectively fell by 51.9% on the year to 10.35 million mt over January-May, official data showed.
China’s LSFO export quota allocation
China’s gasoline, gasoil, jet fuel export quota allocation
China’s gasoline, gasoil, jet fuel export quota allocation
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Source: SPGlobal
