Sinopec piles pressure on teapot refiners


BEIJING, March 28, 2017 – Sinopec, China’s leading refiner, announced on Tuesday that it will begin centralising purchases of refined fuels through its Beijing office next month, a move that is expected to squeeze independent “teapot” refiners.

“The aim is to ensure purchases of high quality fuels and improve Sinopec’s bargaining power,” Michal Meidan, an expert at consultancy Energy Aspects, told Reuters, adding that the smaller firms’ margins would likely be negatively impacted.

Previously, these purchases were handled through Sinopec’s regional offices, allowing the independent suppliers to retain some bargaining leverage.


The move comes months after the Chinese government revoked fuel export quotas for private refiners, forcing the teapots to sell their products domestically.

Nevertheless, attempts to pressure the independents could lead them to invest in infrastructure that would link them with private customers and circumvent big state firms.

“It’s a rare chance for us to make an aggressive push to reach clients beyond the oil majors, the thousands of private gas stations,” Zhang Liucheng, vice-president of China’s largest independent refiner, ShanDong Dongming Petrochemical Group, told Reuters.

Earlier this month, Dongming Petrochemical signed a USD 566-million deal for a crude terminal in the port city of Rizhao in Shandong province.