China's Plans for Oil Reform

China is reportedly considering expanding access to crude oil imports in 2014, a move that would be key to its ability to implement broader reforms in the country's oil industry. Historically, the government had provided quotas of imported crude to China's three state-owned oil giants. But this trend began to shift in late 2012, when state-owned chemical company ChemChina was granted an annual quota of 10 million tons of crude, or roughly 200,000 barrels per day. According to a government document leaked recently to Reuters, several private refineries may soon receive quotas of a similar size.

This shift in policy would serve two primary purposes: First, China is attempting to shutter many of the country's small private refineries while boosting production at larger independent facilities. Beijing has struggled in its pursuit of such goals in the past, but giving the larger refineries access to imported crude would make it increasingly difficult for the smaller ones to survive. Second, the government hopes that supporting the large private plants would introduce a degree of controlled competition in the Chinese oil and natural gas sector, where reform is critical to Beijing's achieving its broader economic goals.