China's oil buying rules loosened amid record imports

China is loosening restrictions under which companies are allowed to import oil, a move that may solidify its spot above the US as the world's largest importer.

The government announced new guidelines on Thursday that opens the door to the direct purchase of crude on the international market by independent refineries, known in the industry as teapots.

It's the latest step in a rapid deregulation of a business that less than a year ago was limited to either government-owned oil processors or trading companies required to sell to them.

“This would be the first time non-state refiners are potentially being granted licences," Liu Aiying, president of Shandong Oil Refining Association, which represents independent refiners, said by phone on Thursday. “Previously, there were dozens of non state companies that had such rights, but not many utilised them because they were forced to sell to refineries owned by the nation's top two oil companies."

The rules released on Thursday build upon an earlier opening by regulators in February that eventually led to five independent re finers being finers being granted licences to process imported crudes though not allowing them to buy it directly.

Shandong Dongming Petro chemical, Sino chem Hongrun Petrochemical, Panjin North Asphalt, Shandong Lijin Petrochemical and Kenli Petrochemical have been granted licences to process a combined 25.8 million metric tons of imported oil a year (about 5,18,000 barrels a day).