Beijing, 30 July (Argus) — Chinese state-owned chemicals firm ChemChina is expected to receive a state crude import licence within two months, allowing the company to bring in 200,000 b/d.

ChemChina is looking to buy heavy sour crude on a delivered basis. The company is also keen on crude with a high acid content. This will be the sixth state import licence given out by Beijing. Fellow state-owned firms PetroChina, Sinopec, CNOOC, Sinochem and Zhuhai Zhenrong control the existing five licences.

ChemChina owns two oil terminals in Penglai and Laizhou in Shandong province capable of receiving vessels smaller than 100,000t. Feedstock is delivered to its refineries in the province via a 106km underground pipeline.

A separate agreement was signed earlier this year with authorities at Qingdao port for vessels above 100,000t to 300,000t, in anticipation of obtaining the import licence.

The company has been securing crude supplies from PetroChina and CNOOC to feed its refineries in Shandong and Heilongjiang provinces. PetroChina supplies heavy crude from Venezuela, while CNOOC sells crude it produces in the Bohai bay.

ChemChina has a licence to import fuel oil and processes the feedstock with no more than 1.5pc sulphur at its refineries.

ChemChina will be starting trial runs of a new 120,000 b/d crude distillation unit at its Shandong Huaxing refinery in October. The refinery will have a total of 240,000 b/d of capacity, including an existing 120,000 b/d unit. The new unit at Huaxing increases ChemChina's refining capacity to 600,000 b/d. The total utilisation rate has been kept at 60-65pc because the company has not been able to source enough crude. Beijing's increase of the consumption tax on fuel oil from January applied further cost pressure to refiners without a crude import licence.

With the import licence and quota, ChemChina wants to raise its refinery utilisation rates to close to 100pc. The company is also in the process of obtaining approval to boost its refinery capacity to 800,000 b/d by 2015.

ChemChina operates and owns more than 200 retail stations in Shandong and hopes to add 100 stations each year.

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