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China has issued a larger-than-expected fuel export quota in the third batch of allocations this year as authorities look to incentivize refiners to sustain economic growth and sell more product abroad at a time when China’s 2023 fuel demand may have peaked.
Chinese refiners and traders are now allowed to export a total of 12 million tons of gasoline, diesel, and jet fuel in the third batch of quotas, industry consultants JLC and OilChem told Bloomberg.
Adding export allowances for marine fuel, the total product export quota rises to 15 million tons, trading sources and consultancies told Reuters on Friday.
Chinese state oil giants Sinopec, PetroChina, CNOOC, and Sinochem Group, as well as China Aviation Oil Co, Zhejiang Petrochemical Co, and Norinco, were allocated quotas to export fuels, consultants at Longzhong and JLC told Reuters. The state-held majors were given 91.6% of the quota across all products including marine fuel, per Reuters estimates.
The latest batch of export quotas for gasoline, diesel, and jet fuel brings the total 2023 quota volumes above the allowances awarded in 2022, according to Bloomberg’s estimates.
In May, China issued 9 million tons of export quotas for refined products, mostly to state-held giant refiners, cutting the allocations in the second batch this year compared to nearly 19 million tons worth of quotas in the first batch granted in early 2023. The reduction of the quotas in the batch in May compared to the first batch in January was widely expected, amid rising domestic demand and weakening margins outside China, a Reuters survey of state refiners and consultancies showed in April.
With a higher third batch of quotas issued this week, China signals it looks to support refinery operations and sales overseas amid a faltering economic recovery domestically that weighs on fuel demand and economic growth.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.