Reuters/Beijing
China’s top crude supplier Saudi Arabia is set to ship about the same volumes to Chinese buyers in 2014 as it did last year, as the world’s second-largest oil consumer takes more from Iraq and Central Asia, traders said.
Iraq has been offering cheaper prices and better payment terms to Asian buyers this year as it increases its output, while two new refineries in China are designed to run on crude from suppliers in Kazakhstan, Russia and the Middle East.
Since those two refineries will provide the bulk of China’s oil demand growth in 2014, Saudi Arabia has been left with little room to increase its Chinese contract volumes. That means its 20% share of the China market will fall.
Saudi Arabia should still retain its spot as China’s No 1 crude supplier, although Iraq looks poised to challenge Angola as the second largest.
“None of the lifters have requested any additional volume for next year,” said a Beijing-based trader with direct knowledge of the Saudi oil exports to China.
Traders estimated that annual Saudi contract volumes to China would hold at about 1.17mn bpd, with top refiner Sinopec Corp taking over 80% of the supplies. The rest will be split between PetroChina Co Ltd and Sinochem Corp.
China’s crude imports grew 4% in 2013, or by an addition of just under 220,000 bpd, in the slowest growth in three years, customs data has shown.
PetroChina’s Sichuan and Sinochem’s Quanzhou refineries, with a combined run capacity of 440,000 bpd, are expected online this year and both are looking past Saudi Arabia for crude.
PetroChina’s landlocked Sichuan plant is designed to process oil from Kazakhstan and Russia, as well as the company’s own output in northwest China.
The Sinochem plant, in Fujian province, will be looking to Iraq, Oman and Kuwait for oil, traders have said.
