Chinese authorities have ordered a unit of state-run PetroChina to stop trading off crude oil import quotas with local refineries as part of a crackdown on excessive fuel production, a move that could cut the country's crude imports by 3%, sources said.
Beijing has stepped up scrutiny of crude oil quota use and imports by state and private firms this year to ease a fuel surplus that has weighed on the sector's profits and led to excess emissions that have undermined China's climate goals, said five industry sources with knowledge of the matter.
"The government is taking a lot more seriously carbon emissions this year, and sees large crude oil imports and large refined fuel exports as something unsustainable," said one official. Under a legacy scheme endorsed by parent company PetroChina , the fuel oil unit partnered with teapot refineries under a so-called "processing" arrangement, under which the firm pays a processing fee to the teapots and buys back refined products such as diesel at an agreed price, said a second official.
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