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SINGAPORE / Reuters
China is on pace to overtake the United States as the world’s biggest oil importer this year, cementing its status as Asia’s most pivotal oil market actor that will increasingly dominate the region’s fuel trade.
For the first time, China imported more crude oil in the first half of the year than the US, government statistics showed. China averaged 8.55 million barrels per day (bpd) versus 8.12 million bpd in the US, a trend that is expected to last. The shift highlights the change in the centre of gravity in global oil markets from West to East. Chinese state-run oil trader Unipec is now the world’s biggest physical oil trader. By drawing more of the world’s oil to its shores, China, the second-biggest oil consumer after the US, will play a crucial role in setting the global price of the commodity, especially as the crude futures market in Shanghai develops.
China’s import surge is being driven by the expansion of its refinery capacity. But, as the domestic demand has not materialized to soak up the fuel supply, China’s exports of gasoline and diesel have climbed to record highs. This flood of products has caused headaches for competitors across Asia and depressed diesel profit margins to multi-year lows in 2016.
“China is putting a lot of pressure on the traditional export hubs of Taiwan, Korea and Singapore to capture the market share within Southeast Asia and Australia,†said Joe Willis, senior research analyst, Asia refining, at energy consultancy Wood Mackenzie. The trend of more refining capacity and higher exports is set to continue. China plans to add at least 2.5 million bpd of refining capacity by 2020, according to a recent presentation from China Petroleum & Chemical Corp, or Sinopec. Sinopec is Asia’s biggest refiner and parent of Unipec.
This year, PetroChina Ltd will start a 260,000 bpd refinery in Yunnan in south China while China National Offshore Oil Corp will start up a 200,000 bpd expansion at its existing Huizhou plant in Guangdong province.