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Saudi Market Share Takes A Hit As Russia Doubles Oil Exports To China

Russia China Transneft

Russian oil exports to China more than doubled in April 2016 compared to numbers from the same month last year, according to a report by Russia’s state-run news agency Russia Today.

By the calculations of General Administration of Customs for the People’s Republic of China (PRC), the 52 percent year-over-year increase amounted to a transfer of 4.81 million metric tons between the two BRICS countries. In March, the imports reached 4.65 million tons.

Two of the PRC’s three major oil suppliers—namely, Saudi Arabia and Iran—saw their Chinese oil orders decline year-over-year. Saudi Arabian oil imports fell by 22 percent to 4.12 million tons, and the Iranian figures dropped by 5.1 percent to 2.76 million tons in the same monthly comparison. Related: The Biggest Winner Of The Oil Bust: Interview With Aeromexico

China’s third major supplier, Angola, increased its business with China by 39 percent to 3.98 million tons in an April year-over-year analysis.

A recent report by the International Energy Agency (IEA) said Russia had overtaken Saudi Arabia as China’s leading supplier of crude oil at the end of last year. Russia Today’s analysis says its home country’s exports to the PRC had more than doubled over the course of the past years—an increase equivalent to 550,000 barrels a day.

The “oil friendship” between Russia and China is two-sided: the Polish Centre for Eastern Studies said China became Russia’s main oil customer in 2015 as well.

New projects worth several billion dollars between Moscow and Beijing have led the two countries to cooperate closely regarding energy industry issues. Related: Fed Pours Cold Water On Oil Price Rally

Sergey Andropov, the Vice President of Russia’s sole oil transport company, Transneft, announced in March that China had agreed to buy 27 million tons of oil from Russia in 2015. The substance will be transported through the Eastern Siberia-Pacific Ocean (ESPO) pipeline, which was built in 2011 as a project between Rosneft, Transneft, and China National Petroleum Corporation (CNPC).

An estimated five million tons of oil runs through the pipeline every year, and new plans will soon increase that number to 15 million tons a year.

Long-term contracts will lock in China’s status as a major importer of Russian crude over the upcoming years as the PRC’s consumption increases along with its development.

By Zainab Calcuttawala for Oilprice.com

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