Refined oil exports making a dent in neighboring markets

China's rising refined oil exports are already having an impact and will continue to influence other markets in Asia and in the Far East as the country's capacity increases, experts said.

China's net diesel exports will expand to more than 6 million metric tons next year due to slowing domestic demand and growing output, said Li Li, research director at ICIS C1 Energy, a Shanghai-based energy information consultancy.

She estimated that the country's net diesel exports will reach 3.5 million tons this year.

China's top-two oil and gas producers - PetroChina Co Ltd and Sinopec Ltd - were both granted much larger export quotas for diesel and gasoline products in October from the Ministry of Commerce, a sign of China's increasing participation in the international oil products market.

Sinopec was awarded a 3.5 million metric ton export quota for refined oil products for the fourth quarter, up 320 percent compared with the previous quarter, according to data from ICIS C1 Energy.

The company's export quotas for diesel grew from 150,000 tons in the third quarter to 1.45 million tons for the fourth quarter, an all-time high.

PetroChina got a 2 million ton refined oil export quota for the fourth quarter.

Li said the fast rise of China's diesel exports has shown that both the government and producers are not as conservative as before in terms of domestic diesel supply in the market.

As the country is becoming more open in the energy sector, industrial insiders believe that private capital will have a possibility in future to participate in the energy exploration, refining and distribution businesses, based on recent governmental policies.

China's diesel refining capacities will continue to grow because of an increasing number of industry players, which will lead to stable diesel exports, the insiders said.

"China does not pursue exports in the oil refining sector, but when we have additional output, it's a good way to balance the profits and keep the revenue stable by exporting some share of the production," said Li.