Russia overtook Saudi Arabia in 2016 to became China's biggest crude oil supplier for the first year ever, customs data showed on Monday, boosted by robust demand from independent Chinese "teapot" refineries.
Russian shipments surged nearly a quarter over 2015 to about 1.05 million barrels per day (bpd), the data showed, with Saudi Arabia coming in a close second with 1.02 million bpd, up 0.9 percent in 2016 versus the previous year. China is the world's second-largest oil buyer and the fastest-growing major importer.
While Saudi Arabia counts China's state oil firms as backbone clients through long-term supply contracts, China's independent refineries - nicknamed "teapots" due to their smaller processing capacity - saw Russia as a more flexible supplier.
For the teapot plants, authorised to import crude oil for the first time in late 2015, shipments from Russia's eastern ports are easier to process, coming in smaller cargo sizes at a closer proximity.
Russia may be able to maintain the top spot in 2017 as it expands exports of its East Siberian-Pacific Ocean (ESPO) pipeline blend crude. Saudi Arabia, meanwhile, is set to shoulder the lion's share of supply cuts agreed to last year by the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers.
"Opec cuts means Gulf producers take a hit in terms of market share, even though most of their cuts are to Europe and US ...Russia has an ESPO expansion coming up as well as supplies via Kazakhstan earmarked for China," said Michal Meidan of consultancy Energy Aspects. State-run Saudi Aramco is expected to look to a new refinery under state-run CNOOC to lift sales.
For December, Russia also held the top spot with supplies up 4.8 percent from the same month a year earlier at 1.19 million bpd. Meanwhile Saudi sales dropped nearly 20 percent from a year earlier to 841,820 bpd, data from the Chinese General Administration of Customs showed.
Total crude oil imports in December hit a record as refiners stepped up purchases ahead of a deal by oil-producing countries to reduce supply and bolster prices.
For the whole of 2016, imports gained nearly 910,000 bpd over 2015, the strongest annual growth on record and mostly driven by teapot buying.
Third-largest supplier Angola shipped 13 percent more crude last year versus 2015, while No. 4 seller Iraq recorded similar growth.
China also boosted imports from South American producers last year, with growth of 37.6 percent from Brazil and 26 percent from Venezuela, the data showed.
Imports from Iran expanded nearly 18 percent last year to a record 624,260 bpd, as Chinese state oil firms started to lift barrels from their investments in Iranian oilfields in addition to term supply agreements.
Comments
Comments are closed for this article.