BEIJING, Dec 22 (Reuters) - Sinochem Hongrun Petrochemical Co. Ltd, a Shandong-based independent refiner and fuel exporter, plans to open a Singapore trading office early next year, the latest of China’s so-called “teapot” refiners to seek a presence in the global oil market.
The new Singapore operation will be headed by Lian Liping, a senior official at state-run Sinochem, which owns a stake in Hongrun’s 140,000 barrels per day (bpd) Shandong plant in eastern China.
Hongrun has also hired Wang Wei, a Singapore-based trader with Brightoil Petroleum and previously on the crude desk at state-run Sinochem, while its Shandong-based trader Han Shuai is also expected to move to Singapore.
All three confirmed their moves. A Sinochem press official said Lian was also appointed deputy general manager of Sinochem Hongrun. A Shandong-based Hongrun official confirmed the setting up of the Singapore operation.
The freeing up of China’s crude trade in late 2015 by giving import permits to independents has led to a hiring spree as the teapots set up their own trading operations, luring traders, marketers and risk managers away from established state-owned giants.
Several have set up offices in Singapore, including Shandong Dongming Petrochemical Group and Shandong Chambroad Petrochemicals Co.
An operation in the Asian oil hub will allow the teapots to have more direct reach to global crude oil suppliers and customers for fuel exports, and also broaden access to bank financing, traders said.
Since early 2016 Hongrun has also become a regular refined fuel exporter and one of the largest by volumes among teapots, including a rare shipment of gasoline cargo to the United States moved by Swiss trader Trafigura.
Two traders familiar with Hongrun’s exports estimated the plant shipped close to 400,000 tonnes of fuel overseas, of which nearly 70 percent was gasoline and the rest naphtha and diesel.
Hongrun operates a 176 km (110 mile) crude pipeline connecting Huangdao port and city of Weifang where it’s situated, and a 5.2 million cubic metres (33 million barrels) storage farm, mostly for crude oil, according to the company website and two company officials.
It is adding another 11 million barrels of crude oil storage at Weifang, said the company officials who declined to be named due to company policy.
Hongrun’s move to open in Singapore comes as Beijing looks set to stop granting fuel export quotas to teapots from January in a surprise move that could deal a blow to the upstart companies.
Traders said it was unclear how independents would place surplus fuel cargoes in the absence of quotas next year. Hongrun may opt to export via Sinochem using the state oil trader as an agent, they said.
Reporting by Chen Aizhu; Editing by Richard Pullin