Environment & Safety Gas Processing/LNG Maintenance & Reliability Petrochemicals Process Control Process Optimization Project Management Refining

China steps up Americas oil imports, Unipec backs ‘new frontier’

SINGAPORE (Reuters) -- China's largest crude oil buyer Sinopec aims to ship more cargoes from Brazil, the United States and Canada, to help ensure stable crude supplies as the Middle East boosts refining capacity and Africa suffers disruptions.

Shipments from the Americas hit an all-time high in March, boosting the region's share of the Chinese market by 1.1 percentage points in the first quarter to close to 14%, data from Thomson Reuters Oil Research & Forecasts showed.

"We're facing a big challenge on the supply side," said Chen Bo, president at Unipec, which purchases crude for Asia's largest refiner Sinopec.

Asia needed to step up crude imports from the "new frontier," the greater US Gulf Coast region made up of the United States, Canada and Latin America, to meet its growing demand, he told a seminar this week.

China is on track to overtake the United States as the world's largest oil consumer this year, Chen added.

China will add just under 2 MMbpd of refining capacity between 2016 and 2020, taking its total capacity to nearly 12.5 MMbpd by the end of this decade.

Also, by end-2018, the total crude import quota for independent refineries will grow to 2 MMbpd, about 500,000 bpd more than March 2017 as government approvals flow through, he said.

SUPPLY DIVERSITY

Asia, which will account for a third of the world's refining capacity by 2020, will have to look beyond traditional markets Middle East and Africa for crude supplies, Chen said.

Security of supply and the optimization of supply were vital for Unipec.

"If every consumer goes to the Middle East and Africa we don't know what will happen to the market. So we have to diversify," he said.

China's crude imports from the Americas, led by Brazil, Venezuela and Colombia, hit 5.61 MMt (1.3 MMbpd) in March, the highest in Reuters' data going back to 2006.

In the same month, China's crude oil deficit came in at a hefty 15 MMt, after touching a record 19 million in December 2016, as domestic production shrank while imports surged, customs data showed.

"Record imports are being driven by falling production, higher refinery runs, huge infrastructure and Strategic Petroleum Reserve builds," said Virendra Chauhan of consultancy Energy Aspects. The agency expects Asia's crude imports, led by China, to rise by 900,000 bpd on the year in 2017.

A preference for low-sulphur oil produced in the Americas by China's private refineries, or so-called "teapots," helped boost imports from the region, while increasing US shale output and production cuts by the Organization of the Petroleum Exporting Countries have made it economical for traders to send huge volumes of crude from west to east.

Next month, China will import its first Southern Green Canyon and Thunderhorse crude from the United States.

Brazil overtook Venezuela as the top South American crude supplier to China in the first two months of this year due to its favoured medium-heavy quality grades, while China became the No. 3 destination for US crude exports in 2016.

The Americas has the potential to become a "global trading hub" in the next decade, Chen said.

Reporting by Florence Tan; Additional reporting by Meng Meng and Chen Aizhu in BEIJING; Editing by Richard Pullin and Clarence Fernandez

Related News

From the Archive

Comments

Comments

{{ error }}
{{ comment.name }} • {{ comment.dateCreated | date:'short' }}
{{ comment.text }}