China's decision to allow qualified local refineries to import and refine imported crude oil would have significant impacts on both local refineries and the whole industry, according to industry insiders.
Qualified local refineries could source crude oil from international market to meet their respective needs as increasing number of suppliers offer diversified options, said Zhang Liucheng, vice president of Chinese largest local refiner Shandong Dongming Petrochemical Group.
Speaking at a recent industry meeting, Zhang said local refineries also could slash financial costs by using letter of credit on international oil market rather than cash payments in advance in domestic market.
Imports and processing of imported crude oil by local refineries would have far-reaching impacts on international petroleum trading in the long run, said Yuan Jun, general manager with state-owned crude oil trading house China Zhenhua Oil Co., Ltd.
Local refineries would import more crude oil and reduce dependence on fuel oil and bitumen, said Yuan. Yuan added that flows and prices of crude oil on international market would change and crude oil varieties suiting needs of local refineries would be popular.
Increasing crude oil imports by local refineries would lift demands for relevant storage, pipeline and affiliated facilities and local refineries' participation in international crude oil market would create market-oriented environment for introduction of crude oil futures in China, according to Yuan.
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