Plans by China’s independent oil refiners to merge are the latest indication of the pressures wrought by the country’s growing refining overcapacity, which has triggered a battle for market share and thrown into question a long-awaited liberalisation of the country’s oil sector.
China’s annual refining capacity is set to reach 808m tonnes by the end of 2017, about 16 per cent of the world’s capacity and just behind the US’s more than 900m. Within the next three to five years, industry experts expect China to overtake the US as the world’s largest oil refining nation.
Refining capacity in China has increased 44 per cent from 2011, even as economic growth began showing signs of slowing. That has led to a widening discrepancy between China’s ability to produce refined oil and its demand for refined products.