A gas station stands in front of the oil refinery facilities of Sinopec in the Pudong district of Shanghai. China, the world’s biggest energy consumer, is a key market for oil exporters as surging output from shale fields from Texas to North Dakota allow the US to rely less on overseas supplies.
Bloomberg/Shanghai
Russia overtook Angola to strengthen its position as China’s biggest oil supplier after Saudi Arabia.
China’s imports of Russian crude from January to June rose almost 27% from the same period last year to about 786,000 bpd, edging out Angola’s 769,900 a day, according to data e-mailed by the General Administration of Customs on Tuesday. Both were dwarfed by Saudi Arabia, the world’s largest oil exporter, which shipped 1.07mn a day.
“Russia will be one of the single biggest contributors to ongoing growth in Chinese crude imports,” David Wech, the managing director of JBC Energy GmbH, a Vienna-based consultant, said in an e-mail before the data release. Angola “has relatively limited output upside and in fact we expect supply to drop” in 2016, he said.
Russian oil shipments to China have been increasing as the country boosts exports of its East Siberia-Pacific Ocean crude using a direct pipeline to northern China and through seaborne shipments from Kozmino, in Russia’s Far East. In 2013, Rosneft agreed to supply 365mn metric tonnes of crude over 25 years to China National Petroleum Corp in a $270bn deal. The same year, the Russian company reached an $85bn, 10-year supply deal with China Petrochemical Corp.
China, the world’s biggest energy consumer, is a key market for oil exporters as surging output from shale fields from Texas to North Dakota allow the US to rely less on overseas supplies. Iraq and Iran rounded out the top five suppliers to China during the first half of the year.
“This trend is likely to persist in the coming years, with many long-term crude supply contracts running from 2014 to 2018” that stem from oil-for-loan deals signed between Rosneft and Chinese state-owned enterprises, according to Amrita Sen, the chief oil-market analyst at Energy Aspects Ltd, a London- based consultant.
“Meanwhile, imports from Iraq and Iran have been rising for some time,” she said in an e-mail. “But Saudi Arabia is also aggressively marketing its crude, so we expect China to remain quite choosy and price sensitive given its spoilt for choice.”
China’s imports from Iran fell 6% from a year earlier to about 591,900 bpd. The Arabian Gulf nation ranked as the fifth-largest crude supplier in the first half, compared with third-largest during the same period in 2014.
With the prospect of easing international sanctions on Iran, China will probably be one of the first to expand its crude purchases from the Islamic Republic, Wech said. The government in Tehran reached a deal with world powers on July 14 that will restrict its nuclear programme in exchange for the removal of international financial and economic curbs.
China’s refinery runs surged to a record high last month as its economic growth beat estimates. Companies including China Petroleum & Chemical Corp processed 43.35mn tonnes of crude in June, or about 10.59mn bpd, data from the National Bureau of Statistics in Beijing showed on July 15.
The Asian country last month regained its status from the US as the world’s biggest crude importer as it accelerated shipments to fill strategic petroleum reserves. China’s overseas purchases in June gained 27% from the previous month to 29.49mn tonnes, equivalent to 7.2mn bpd, while US crude imports last month averaged 7.08mn bpd.
