Singapore — China is set to award a crude oil import license to Zhejiang Wuchan Zhongda Petroleum, the first to be awarded to an independent trading company since the Ministry of Commerce began allowing companies in the Zhejiang Free Trade Zone to apply, the ministry said in a statement late Monday.
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Register NowThe license will enable the company to deliver crudes into the International Energy Exchange run by the Shanghai Futures Exchange and import crudes for refineries with quotas to crack imported crudes, which includes both state-owned and independent refineries.
Granting crude import licenses to trading companies in the Zhejiang FTZ is seen as a move to attract participation in Shanghai crude futures, which were launched last year.
However, market participants said they expected the company would be more inclined to sell to the independent refineries.
"This will help improve the company's business in both the physical crude trading and the futures trading," an analyst in Beijing said.
The ministry in February 2018 outlined regulations for trading companies registered in the Zhejiang FTZ to apply for crude import licenses.
They include requiring companies to own at least 100,000 cubic meters of storage capacity in Zhoushan, have credit access of over $1 billion and employ more than five trading specialists.
China has allocated a total of around 84.06 million mt of crude import quotas to 44 qualified refineries in its first tranche for 2019, mostly to the country's independent refineries.
But only 27 of those refineries have the crude import licenses, and the rest have to reply on others to import crudes on their behalf.
Zhejiang Wuchan Zhongda was set up in mid-2018 as an 80:20% joint venture between Zhongda Wuchan Metal and Zhoushan Communications Investment. The latter is a subsidy of the Zhoushan State-owned Assets Supervision and Administration Commission.
--Staff, newsdesk@spglobal.com
--Edited by Wendy Wells, wendy.wells@spglobal.com