China lifts oil import quotas

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Last updated at: (Beijing Time) Friday, December 12, 2003

China lifts oil import quotas

China Thursday announced a new import policy to replace existing import quotas for State-traded oil products next year as part of its commitment to the World Trade Organization. China will see an increasing dependency on crude oil imports, with the amount of crude oil imported rising from 31 percent in 2002 to 50 percent four years later in 2007.

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China Thursday announced a new import policy to replace existing import quotas for State-traded oil products next year as part of its commitment to the World Trade Organization.

But the quota lift is not likely to send shockwaves in the market as the government will impose internal controls over imported products by requiring importers to register their count, traders said.

They also said the price of oil products, most of which are fuel oil, are likely to rise by 15 to 20 per cent next year to feed the increasing demand.

The Ministry of Commerce said it will scrap the import quota for primary refined oil products including gasoline, gas oil, kerosene, naphtha and fuel oil, starting January 1.

Other than fuel oil, importers have to import oil products via four State-designated oil firms -- Chinaoil, Unipec, Sinochem Corp and Zhuhai Zhenrong Corp.

Meanwhile, the ministry also lifted import quotas for other products including rubber, tyres and auto parts.

"Although the import quota has been lifted, volume control still exists, as the government does not want to see the market in disorder,'' said a manager from a State oil-trading company.

"But fuel oil imports are expected to rise next year to satisfy the market demand surge," said the manager.

China's oil product imports soared 49.3 per cent year-on-year to 23.74 million tons in the first 10 months.

Fuel oil, which accounts for the bulk of imports, reached 20.1 million tons, exceeding full-year imports by 22 per cent.

Earlier in July, the government decided to issue a total of 6.1 million tons of import quotas for all oil products in 2004 to non-State firms, of which 5.6 million tons are for fuel oil and the remainder mostly for gas oil.

Half of oil consumption to depend on imports within four years

China will see an increasing dependency on crude oil imports, with the amount of crude oil imported rising from 31 percent in 2002 to 50 percent four years later in 2007, according to official research released Thursday.

Research by China's Ministry of Communications on marine oil transportation predicted that the country would import 100 million tons of crude oil in 2005, 150 million tons in 2010 and in 2020 the number would soar to 250 to 300 million.

China would become the world's second biggest oil consumer following the United States and third oil importer after the United States and Japan, said the research report.

The more than 6 percent annual growth of China's national economy and the readjustment of the economic structure are behind the country's higher demand for crude oil, but the oil production failed to keep pace with the economic growth and only registered 1.7 percent growth annually, the research report pointed out.

The shortage of oil supply forced China to become a net oil importer since 1993. Official statistics showed that the volume of imported oil has increased from over 20 million tons to 70 million tons from 1996 to 2002.

China imported approximately 1.4 million barrels of crude oil per day in the international market during the time, the report added.

The experiences of foreign developed countries proved that the oil consumption would increase at a low speed in an economy backed by industrial sectors, and during the industrializing process before the tertiary industry becomes the backbone of the national economy, the domestic oil consumption would undergo a rocketing growth, the report further explained.

China would be in a vital period of industrialization from now until 2020, stressed the report, predicting that China's average annual consumption of crude oil would secure an increase by 4 percent in the coming five to ten years.

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