18  November  2018

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 Infopetro -> Industry in Focus

China Escalates Imports of Crude from United States


Analysts said on Tuesday they believe a dramatic surge in

imports of US petroleum products into China in the

current year is a win-win for the world's biggest trading


China imported an average of 100,000 barrels of crude per

day from the United States during the first five months

of 2017, 10 times the level for the same period last

year, according to official customs data.

The General Administration of Customs figures, released

earlier this month, indicate the upward trend is also

picking up speed, with imports surging to more than

180,000 barrels per day in April and May.

"China has long depended on fuel imports and the cheaper

energy price, in addition to the massive amount of US

oil, has definitely contributed to the increase in

imports," said Li Li, energy research director at ICIS

China, a consulting company that provides analysis of the

energy market here.

"The US' increasing share of China's energy imports will

also ensure the country's energy security, as China has

been exploring different crude oil import channels," Li


US Census Bureau data on international trade show that

the combined value of US crude oil, gas and refined

petroleum exported to China in the first five months of

2017 totaled over $2.76 billion.

China purchased $1.6 billion of US crude, representing 21

percent of US global crude oil exports from January

through to May.

The US lifted a 40-year old ban on oil exports two years

ago, as its production levels rose to their highest in

decades, boosted by surging new shale oil and gas output.

Wang Lu, an Asia-Pacific oil and gas analyst at Bloomberg

Intelligence, said US oil exports could also lower OPEC's

global market share of oil production and could undermine

the producer group's willingness to comply with their

agreed output reductions.

China became the biggest purchase of US crude oil in

February, overtaking Canada, against the backdrop of

OPEC's scaling back of its production.

"While the output-cut deal has been extended to March

2018, whether OPEC will comply with that undertaking is

uncertain," Wang said. Crude oil exports from US to China

surged to 759,000 metric tons in May, and its market

share as a percentage of China's total oil imports rose

to 2 percent from 0.1 percent a year ago, while that of

the Middle East fell to 41.6 percent from 46.7 percent,

Wang said.

China's biggest oil and gas producer, China National

Petroleum Corp, said earlier it would import more crude

oil and natural gas from the US, while also considering

involvement in the country's growing liquefied natural

gas export industry.

CNPC chairman Wang Yilin said his company was setting its

sights on having a growing reliance on US energy imports,

on the sidelines of the Belt and Road Forum in Beijing.

"The US has very rich oil and gas resources, and as China

pursues a diversification of its crude supplies the US

will of course be one of the sources," he said.

"We will (also) consider exploring cooperation in areas

such as jointly developing liquefied natural gas

facilities and gas transport," he added.

Xiamen University energy expert Lin Boqiang, who has

advised Beijing on oil policy, said that China should

consider buying oil from places other than the Middle


The glut of US crude also made it cheaper than oil from

the Middle East.

"If there's an opportunity to buy oil from somewhere

else, we should," he said.

"The precondition is that it must be economical."

US crude prices were currently relatively low, while the

move to increase oil exports is also in accordance with

Washington's target to reduce the trade deficit between

China and the US, Lin said.

US Energy Secretary Rick Perry called for more energy

cooperation with China during a visit to Beijing in June.

Expanding crude exports also means more jobs in the US,

said Ray Perryman, president of the consulting firm

Perryman Group. He was quoted by the New York Times

estimating that the expanded crude exports could add over

480,000 jobs nationally over the next couple of decades,

nearly 60 percent of which will be in Texas, even if oil

prices remain moderate to low.

Xiamen University's Lin said the US currently accounts

for a small percentage of China's oil imports, with

Russia, Saudi Arabia and Angola still its top crude


However, as China keeps seeking to diversify its oil and

gas suppliers£­with its own oil fields becoming less

productive and geopolitical worries posing a threat to

disrupt supplies from the Middle East£­he was optimistic

about future US-China oil cooperation.

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