• 4 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 7 minutes Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 13 minutes NordStream2
  • 2 days Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 17 hours California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 11 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 18 hours "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 21 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 17 hours An Indian Opinion on What is Going on in China
  • 22 hours Can Technology Keep Coal Plants Alive and Well?
  • 2 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
  • 2 days Succession Planning in Human Resources for Vaccinated Individuals in the Oil & Gas Industry
  • 4 days Perfect Energy Storm in Europe: turning our back on fossil fuels is easier said than done!
  • 15 hours U.S. : Employers Can Buy Retirement Security for $2.64 an Hour
  • 20 hours Storage of gas cylinders
  • 4 days Nord Stream - US/German consultations
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Chinese Oil Majors Could Form A Powerful Buyers Club

China’s state-owned oil companies—Sinopec, CNOOC, PetroChina, and Sinochem—are discussing an arrangement to buy crude oil together instead of individually, to avoid bidding wars and gain more bargaining power, unnamed sources in the know told Bloomberg.

The group has already secured the support of the central government and its first step as a collective buyer would be to bid on Russian and African oil cargos on the spot market, the Bloomberg sources said.

If the group bidding pans out, it could indeed give the four quite a lot of bargaining power: Bloomberg notes that Sinopec, CNOOC, PetroChina, and Sinochem together import more than 5 million bpd of crude oil, which is more than 20 percent of OPEC’s total daily production. That stood at a little over 24 million bpd as of May.

The idea of these four companies grouping together first emerged last year, but it seems the time was right to give it a try this year, amid the havoc that the coronavirus outbreak wreaked on oil markets.

China’s state giants, according to Bloomberg, struggled to maintain their rate of imports during the worst of the crisis, under their long-term contracts with large exporters such as Saudi Arabia and the UAE. The fact that the grouping is taking place suggests the majors want to be more flexible for the future, and not as bound by the so-called nomination process that gives the oil seller power to decide on the final volumes to be delivered even if the buyer cannot accommodate all of them.

China’s state-owned oil companies have been among the worst affected by the Covid-19 crisis, according to analysts. All three firms posted losses for the first quarter and cut capital expenditures for this year as the oil price collapse and the fuel demand crash dented their revenues.

Going forward, revenues are expected to continue to be weak this year, and losses will likely mount in the coming quarters. Longer-term prospects are brighter due to government support and orders for companies to boost oil and gas production in China.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Mamdouh Salameh on June 29 2020 said:
    The concept behind Chinese oil buyers’ club is to gain more bargaining power and to secure the most competitive prices for their crude oil imports.

    This isn’t different from the concept behind the founding of OPEC sixty years ago. Nor is it different from Tokyo Electric Power Company and Tokyo Gas Company forming a group to buy all the LNG needs of Japan at the most competitive prices.

    It is also similar to the grouping of Korea Gas Corp (KOGAS), Japan’s JERA and China National Offshore Oil Company (CNOOC) which collectively represent one-third of the world’s LNG purchases.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News