First Bonded & Blended crude sold last week at Port of Qingdao. State owned refineries and more than 30 teapot refineries in Shandong Province are processing over 100 million tons of crude oil per annum which makes the area largest refining/chemical industry. The blended crude done at the bonded tanks will add more flexibility to local customers.
Port of Qingdao and its sister ports receive 35% of whole country’s 505.7 million tons crude imports last year. That’s one of the reasons the United States insists China purchase American energy products, worth say in year One 18.5 billion US Dollars, Year Two 33.9 billion US Dollars.
But there are several bans to the refineries, one of which is they have to buy crude and blend them at their own facilities that does not sound economic, or buy blended crudes from Malaysia, Singapore, Korea as Chinese Custom House does not allow different crudes under different tax codes to be blended before each is declared and delivered.
Then the solution comes. Qingdao Free Trade Zone was approved last August by the State Council allowing crudes blend in the bonded tanks, the blended crude then can be sold to refineries.
BP is the pioneer to develop Shandong market which witnesses the signing of a cooperation agreement with a Chinese bank, Port of Qingdao and local oil trader/refinery. BP’s sale last year in this area was estimated 100 million barrels. BP will take another 150,000 CM tanks in the port of Qingdao for expanded bonded storage. And it further plans to set up 500 gas stations to provide service to end users in two adjacent provinces.
The first blended crude, 20,000 metric tons of crude coming from Angola and Congo, was switched to a refinery via pipeline on 27th Feb. That makes Port of Qingdao a real bonded oil supermarket which can provide tailor-made products to its customers, pretty similar to iron ore sale in China (blended as well). It is believed this honor definitely went to the JV of BP and Port of Qingdao.
Realizing the business opportunities, bunker and product traders are proactive to set up their business in this area. CHIMBUSCO and Sinopec Bunker are working together with local custom house, shipping community to set up Bunker Supply Alliance of Shandong in December 2019 to expand ship supplies.
Source:Simon Young
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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