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China's teapot refineries lobby for fuel export permits

Kitco News

BEIJING, March 10 (Reuters) - China's independent oil refineries, known as "teapots", have sought to lobby the government to lift a ban on fuel exports, in a proposal made to the annual meeting of parliament this week, two refinery executives said on Friday.

China has suspended the grant of export quotas to independent refiners for this year, ending a year-old policy allowing some independents to sell diesel, gasoline and naphtha abroad and dealing a blow to the group. In the proposal, Wang Youde, chairman of Hengyuan Petrochemical Co, a local-government-backed small refiner, and Li Xiangping, chairman of largest teapot refiner, Shandong Dongming Petrochemical Group, have sought lifting of that ban.

Both are parliament members of eastern Shandong province, a hub for China's teapots, which have become a catalyst in the global oil market since late 2015 and helped lift the country's purchases of crude oil to all-time highs last year.

"As the government did not allow independents to export fuel this year, we are facing tougher competition in the domestic fuel market, as well as declining profits," Dongming's Li said in an email response to questions from Reuters.

"We suggest the government grant us this policy change so that private refiners can reach both domestic and international markets, a key condition for us to become global players."

Though teapots exported only a fraction of China's record fuel exports last year, ending the scheme will hand control of the lucrative export business back to the "Big Four" state-run oil majors. It is not clear when the government will respond to the proposal, said Hengyuans' Wang.

(Reporting by Chen Aizhu and Meng Meng; Editing by Clarence Fernandez)

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