China has risen as the world’s largest importer of crude oil, moving ahead of the United States, according to data provided by Gibson Shipbrokers.
Namely, China reached an average of 8.55 million b/d of crude oil imports in the first half of 2017 compared with 8.12 million b/d imported by the United States.
The ship broking company said that the country’s ever greater role in the global oil market, coupled with declining domestic production and refinery expansions, should prove positive to tanker demand in years to come.
Although this trend looks set to continue, “other factors play a role,” Gibson Shipbrokers said.
One of the biggest differences between China and the United States is domestic oil production. China’s domestic crude production has been in gradual decline. Gibson cited data by Reuters showing that domestic production fell by 5.1% in the first 6 months of 2017, averaging 3.89 million b/d. This is in contrast to growing US production as the shale industry has been revitalised in recent months and highlights a growing trend in China of increased crude imports to replace declining domestic production.
“Another factor driving imports has been the continuing effort to build strategic petroleum reserves (SPR). Finding accurate data on the levels of SPR build can be difficult. However, by adding crude imports to domestic production, minus refinery throughput an idea of surplus oil used to build SPR can be identified.”
Gibson informed that it is assumed that China will continue to build their SPR for years to come with the IEA highlighting 2020 as a tentative completion date, with 182 million barrels of storage space yet to be commissioned.
China plans to add 2.5 million b/d of refining capacity by 2020, supporting growth in Chinese oil imports into the future, a recent presentation from Sinopec shows.
“In recent years the expansion of China’s refining capacity has pressured regional refining margins, as China’s refined product exports rise. Politics may impact this in the future, but expanding capacity does look set to place China in a more dominant position within the refined products market.”