16 local refineries form a purchasing alliance, aiming to further break monopolies

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Yesterday, 16 local refineries established the China Petroleum Procurement Alliance. These local refineries are mostly enterprises that have obtained the right to import crude oil as well as the authority to use imported crude oil. Since last year, domestic refineries have been making rapid progress in striving to obtain the \"two rights\" related to imported crude oil. As more and more domestic refineries gain these rights, their strength continues to increase, along with their ability to compete independently. Analysts believe that this move will not only help enhance the influence of China’s independent refineries on the international stage, but it also serves to break the monopoly over domestic crude oil use. 16 local refineries form a petroleum procurement alliance for China On February 29, the China (Independent Refineries) Petroleum Procurement Alliance (hereinafter referred to as the “Alliance”) was officially established in Jinan. The first batch of member companies in this alliance includes 16 firms such as Dongming, HSBC, and Tianhong. Among them, 5 companies have obtained the qualifications for importing and using crude oil, accounting for 62.5% of all independent refineries in the country that possess such qualifications. Nine companies have submitted applications and are currently under inspection, representing 90% of all companies in this category. In addition, there are two more companies, Jiangsu Xinhai Petrochemical and Henan Fengli, that are preparing to submit their applications. Adhering to the principles of collaboration, non-profit nature, voluntariness, and compliance, the alliance brings together domestic refining companies with import quotas to establish a platform for the centralized procurement of imported crude oil. This enables centralized purchasing, unified negotiations, consistent pricing, centralized settlement, and centralized financing. “This is another attempt by Shandong’s local refineries to demonstrate their strength and enhance their ability to compete on their own. ”Xu Na, an analyst at Zhuochuang Information, told reporters that the establishment of this alliance will promote reasonable and orderly competition and safeguard the interests of enterprises. In the long term, this institution has created a strong platform for domestic independent refineries to compete alongside large oil producers and traders; it also provides a practical arena for enhancing international procurement capabilities and improving skills in international negotiations. At the same time, local refineries formed alliances as they gained the two rights to import crude oil, thereby strengthening their capabilities. It is understood that due to a shortage of raw materials, the operating rate of local refineries in previous years could only remain around 40%, and sometimes even lower. However, with the availability of imported crude oil and the phasing out of outdated facilities, the amount of raw material obtained by local refineries is now almost sufficient to meet annual demand, and their operating rates have reached record highs. Xu Na believes that the relaxation of restrictions on the right to use imported crude oil and the right to import it represents a crucial step toward marketization of domestic refined oil products. Before this, such rights were held only by state-owned enterprises such as Sinopec, CNPC, and CNOOC; faced with almost stringent requirements, private enterprises could only sigh in frustration. In her view, the relaxation of restrictions, coupled with the formation of alliances and the reuniting of domestic independent refineries, enables them to step closer to the international crude oil trading market. This not only helps to enhance the influence of these domestic refineries on the international stage but also opens a new chapter in breaking the monopoly over crude oil use in the country and improving the order of the domestic refined oil market.