China Begins Breaking the Oil Monopoly

The opening of the oil sector is underway:

China's Guanghui Energy wins approval to import 4,000 bpd of crude oil
China's Guanghui Energy has received a crude oil import licence from the government, becoming the first non state-owned enterprise to be granted the sought after licence as Beijing gradually loosens its grip on the oil market.

China, the world's second-largest oil consumer, regulates its oil imports via a quota system and the latest approval is in line with the government's pledge to allow more private participation in the energy sector as part of a broader move to reform its clunky and inefficient state-owned sector.

Guanghui has interests in Kazakhstan that give it ample reserves.

The opening of the market comes at a time when efficiency is sorely needed: Chinese oil demand declines
Apparent oil demand, a reflection of how much oil goes into domestic refineries combined with net oil product imports, decreased 2.1 percent in July year-on-year. From June, apparent oil demand dropped 6.2 percent to 9.61 million barrels per day.

"The weakness in China's oil demand reflects the ongoing slowdown in its economy," James Bourne, Platts associate editorial director for Asia news, said in an emailed statement.

Chinese coverage of Guanghui obtaining import license:
广汇能源获原油进口资质 国内炼油产业将洗牌
The industry's long-awaited permission crude oil imports, with the Guanghui Energy (600256, SH) yesterday (August 27) evening a paper proclamation officially break the ice.

Guanghui Energy announced that the August 27, the Xinjiang Guanghui Energy Department of Commerce received a notification has been received under the Ministry of Commerce issued a business letter document [2014] No. 635, "Commerce Department on Crude Petroleum Ltd. Xinjiang Guanghui given non- state trading import qualified approval. "

According to the approval, a subsidiary of Xinjiang Guanghui Guanghui Energy Petroleum Ltd. (hereinafter referred to as Guanghui oil) to obtain non-state trading of imported crude qualification; arrange Guanghui crude oil in 2014 to allow the import of non-state trading volume of 200,000 tons; wide Petroleum crude oil according to the market situation will be sold to meet industrial policy refineries.

"Daily Economic News ( microblogging ) , "Reporters noted that according to the relevant analyst previously disclosed, the right to apply for crude oil sales Guanghui Energy has also been submitted under policies issued or far off. As China's crude oil imports in the first company to receive qualified private enterprises, Guanghui Energy overseas oil and gas resources can be directly shipped back to their own country, to form from upstream exploration to downstream sales of the whole industry chain. Domestic refining industry, crude oil imports could break the ice with the authority and re-shuffle.

Sales to be over two crossings

Ice-breaking crude oil imports permission will be treated as a monopoly in the field of oil once again the depth of breaking history is written. This year in February, Guanghui Energy has announced that, in accordance with offshore oil and gas resources Guanghui and exploration and development capabilities have been obtained, is applying for non-state trading of crude oil and the corresponding right to operate a quota, then, so the company's share price repeatedly touted.

Relevant information, according to China's existing policies, sub-state trading of crude oil imports and non-state trading are two, have the right to operate state trading enterprises currently only five, including the United Oil, in conjunction of, CNOOC , Sinochem and Guangdong Zhenrong, this trade is no quota restrictions.

At present, a total of 22 non-state trading enterprises have business qualifications of crude oil, 2012 ~ 2014 Chinese trade in this part of the quota is 29.1 million tons / year. However, the amount of numbers to complete these quotas were not disclosed.

Acciona think C1 Energy Research Center senior researcher Zhang Ye had told the "Daily Economic News" reporter revealed that there Guanghui Energy insiders said at the beginning to get the right to import and quotas, the company will cooperate with domestic refineries, These overseas sales of crude oil, while the sales target is mainly imported crude oil is waiting for national deregulation of eligibility to use local refineries.

However, Zhang Ye believes that in accordance with existing national policies, Guanghui Energy also had at least two off in order to ultimately achieve sales: first, to obtain crude oil sales Guanghui own right; Second, the local refinery's crude oil imports granted the right to use. The basic condition for obtaining the right to sell oil companies include: registered capital of 100 million yuan; has a long-term, stable crude oil supply channels; has a long-term, stable, legitimate crude oil sales channels. Currently has a total crude oil sales qualified enterprises 24.

In addition, Zhang Ye further revealed that Guanghui Energy is applying for oil exploration qualifications, but also very likely to be granted.

Guanghui will form the whole industry chain

It is worth noting that, in 2013, Guanghui Energy subsidiary through overseas acquisitions, etc., to obtain a Kazakhstan oil and gas blocks Zaysan 1.1639 billion tons of crude oil resources, as well as oil and gas projects in Kazakhstan 南伊玛谢夫 crude oil reserves 210,000,000 tons. The crude oil import qualified implemented overseas oil and gas resources can be directly shipped back to their own country, which means Guanghui Energy will be formed from the upstream exploration to downstream sales of the whole industry chain.

Taking into account the pace of domestic private enterprises to upgrade behind oil and raw materials and low capacity utilization gap big problem, Zhuo record information oil analyst Chen Qing believes that imports of crude oil Guanghui energy will flow into some local refineries.

"With the permission of the ice-breaking crude oil imports, believe domestic crude oil gap will gradually narrow." Chen Ching noted Guanghui energy for domestic private refineries pointed out another possible way in terms of raw materials, which can be obtained from the raw materials Domestic turning to overseas deployment, the acquisition of oil and gas fields, etc. upstream industry chain development.

Chen Ching also believes that in recent years, China's oil refining overcapacity situation highlights, in response to the future of the idle capacity of private refineries to resume oil supply by leaps and bounds, China should actively layout strategic storage of crude oil and refined oil, while enterprises should accelerate the construction of a reservoir and deployment, to achieve strategic storage and commercial storage at the same time, power and ease overcapacity.

The industry believes that, in the "two barrels of oil," the implementation of reform in the context of mixed ownership, the possibility of Xinjiang Guanghui energy as energy companies involved in the larger regional cooperation, if you really can open to private oil exploration and qualifications, which would break a monopoly upstream pattern.

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