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,
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.