China’s Teapot Refineries Face Regulatory Challenges

China’s independent petroleum refining industry comprises an estimated one-fifth of the nation’s nameplate capacity – or some 2 mbpd. Many of these independent plants have a capacity of around 40 kbpd (2 mtpa) or less, and are typically referred to pejoratively as “teapots.” These small refineries fell into the cross-sights of Beijing’s regulators a few years ago, as they sought to rein in an industry segment whose growth had overheated. To cool this segment, China’s economic planners mandated the closure of dozens of teapot refineries with a capacity less than 2 mtpa by the end of 2013. It now seems, however, that owners of some of these plants are planning to boost their capacities above this threshold as a means of continuing operation. Download here