The Impact of Structural Upgrades in the Chinese Oil Refining Industry

These days, China’s exports of petroleum products are rapidly growing. The country has seen a decline in the growth of domestic demand for petroleum products as it adapts to the new normal, where less rapid growth is projected. At the same time, its refining capacity already outpaces domestic demand.The country’s export volumes of petroleum products have continuously expanded since the Chinese government allowed private refineries to import crude oil for refining purposes and implemented export quotas for petroleum products in 2015. Furthermore, as part of a strategy to deal with the conditions of the new normal, the government is actively promoting the export of high-quality petroleum products, deemphasizing its previous focus on exports of low-quality products as the oil refining industry has advanced. Should the country expand exports of high-value added petroleum products through structural reforms to its oil refining industry, South Korean refineries will inevitably face outside competition when exporting refined products to major export destinations, namely Asian markets. This paper aims to diagnose the structural changes of the oil refining industry in China, provide analysis on its possible impact and describe the implications those impacts carry for the refining industry in South Korea