19 April 2019

Who will gain from China oil import reform?

As speculation swirls that China could soon open up the crude oil import business, it is time to look around the market to assess who has the potential to capitalize on the upcoming reform.

Guanghui Energy Co. Ltd. (600256.CN) is widely tipped as one of the shortlisted candidates that will probably be granted the crude oil importation right. According to the China Securities Journal, the company is being backed by the Xinjiang regional government in the race.

The Xinjiang-based oil & gas behemoth has an oilfield project in neighboring country Kazakhstan. But under the current practice, the output from that project has to go through PetroChina’s (00852.HK) import channel if it is transported into China. Worse still, the crude will be used to feed the refineries of PetroChina first, with price set by the big oil giant.

Now, if Guanghui gets the import right, it will have a greater say about the final destination of its crude oil as well as the pricing.

Beside those sitting on vast oil reserves overseas, the midstream domestic players also stand to gain from the possible reform as freer imports are bound to spur the demand for storage and logistics. Sinochem International Corp. (600500.CN), the country’s largest third party petroleum storage provider, is thus worth watching.

– Contact the writer at [email protected]


    EJI Weekly Newsletter

    Please click here to unsubscribe