The quotas, which followed Beijing's policy in January to offer tax sweeteners to boost local production of the fuel, paves the way for Chinese refiners to almost fully cover the demand from its coastal bonded marine fuel market of 12 million tonnes annually.
The quotas will be issued to four state-run firms - Sinopec Group, CNPC, China National Offshore Oil Company (CNOOC) and Sinochem Group - as well as private refiner Zhejiang Petrochemical Corp.
China announced in January to waives consumption tax and value-added tax on the fuel, to make Chinese production competitive versus rival supplies from Singapore and South Korea.
Under the allotment, Sinopec is expected to receive 4.29 million tonnes, CNPC 2.95 million tonnes, CNOOC 860,000 tonnes and Sinochem at 900,000 tonnes, the sources said.
Two sources at ZPC said its refinery, located in China's top bunker port Zhoushan, will be allotted one million tonnes, though the refiner is required to export via state-run companies as proxies.
China's commerce ministry will include VLSFO into its export license management scheme from May 1, it said in a statement on Tuesday.
The government may top up with another 5 million tonnes quotas in a second allotment later in the year if required, two of the sources said.
The global shipping industry has since start of this year shifted to cleaner, 0.5 per cent or lower sulphur marine fuel, to comply with new emission rules by the International Maritime Organization.