China relaxes pressure on small lubes producers for export and domestic supply.
Plummeting oil prices have lead to a sharp spike in lubricants production as companies try to turn a profit. CNPC expects net diesel, kerosine and gasoline exports to rise by 31% in 2016 with smaller, independent producers using low oil prices to drive those gains.
The Chinese oil giant expects net exports of oil products to reach 25m metric tons by the end of this year.
In a bid to fill strategic reserves, China relaxed domestic production rules and allowed independent "teapot" refiners to begin processing crude. These producers, mostly based around the Shandong area, are rapidly increasing output and encroaching on market share previoulsy owned by larger manufacturers.
Similarly, China has now also relaxed rules on exporting lubricants products, according to trade journal Lubes 'n' Greases. Previously, the government wanted to retain as much fuel and lubes products for domestic consumption as demand grew. They achieved this by forcing smaller producers to pass product through PetroChina, CNPC or CNOOC.
Now, however, with domestic supply strong, the Ministry of Commerce has released new rules that will enable smaller manufacturers to export with ease. This, in turn, will also reduce stress on domestic markets as a result of over-supply.