Published — Sunday 9 December 2012
Last update 8 December 2012 1:20 am
BEIJING: China’s crude oil imports from Saudi Arabia are likely to rise about 11 percent next year, faster than this year’s growth rate, as refiners lift output in anticipation of an economic recovery and an increase in fuel demand, industry officials said.
China, the world’s second-largest crude consumer, is expected to buy about 1.17 million barrels per day (bpd) of Saudi oil next year, 120,000 bpd more than this year’s contracted amount. The figures are based on estimates by industry sources with direct knowledge of the supply situation.
China, which imports about 5.3 million bpd of crude a year, is Saudi Arabia’s third largest customer after the US and Japan. In the year to October, imports from Saudi grew 8.6 percent on the year to 1.06 million bpd, compared to growth of 12.6 percent in 2011.
Most Asian buyers are being forced to rework import plans to factor in a cut in purchases from OPEC member Iran due to tightening Western sanctions. China, Iran’s top trading partner, has cut imports by 22.2 percent in the January-October period from a year earlier.
China sees Saudi Arabia, the world’s top oil exporter, as a strategic partner capable of providing stable supplies, and the state energy companies of both nations are in a $10 billion joint venture to build a 400,000-bpd refinery on Saudi Arabia’s Red Sea coast.
China’s crude oil demand is one of the factors propping up global crude prices, at around $100 per barrel . This year, China’s oil demand is forecast to grow just 2.8 percent in its slowest pace in more than a decade, the International Energy Agency says, due to a slowdown in the economy, but there are signs of a revival next year.
Sinopec Corp, Asia’s largest refiner, would take in more than 80 percent of the total Saudi supplies to China. China’s No.2 refiner, PetroChina, and state-run Sinochem Corp, will use up the rest, the sources said.
“Sinopec’s imports of Saudi crude have been increasing steadily over the past years and are expected to rise further as Sinopec’s refining capacity will rise steadily over the next few years,” said one Chinese trader.
Sinopec is estimated to increase Saudi imports by up to 80,000 bpd, as it adds new refining facilities at two subsidiary plants, a 200,000-bpd unit started in late November at Maoming in south China and a 160,000-bpd unit at Jinling refinery in east China. Sinopec and Aramco are expected to finalize the 2013 contract soon, traders said.
Most of the new capacity is geared toward processing high sulphur, or sour, crude.
The volume for the Fujian refinery jointly owned by Sinopec, Aramco and Exxon Mobil will remain the same, at 200,000 bpd.
PetroChina will raise its 2013 Saudi crude term volumes by 40,000 barrels per day (bpd) to around 160,000 bpd, up a third from 2012, trading executives have said.
The total increment matches the increase Sinopec agreed with Iraq, the world’s fastest growing crude exporter, as the refining giant sought to diversify supplies.