Amid a increasing global appetite…
Crude prices will likely get…
Less than a year after the Chinese government allowed local refineries to use imported crude, the demand for overseas oil has risen by 7.6 percent, exceeding 30 million tons in April for the third consecutive month this year.
In July 2015, the central government in Beijing allowed a growing number local refineries, also known as “teapot refineries”, to start importing crude, which led to gradual increase in demand.
Thus, according to data of the Chinese General Administration of Customs, China last month imported 32.58 million metric tons of crude oil which equals to 7.96 million barrels a day, up 3.2 percent from the previous month.
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These figures show a 7.6 percent increase compared to crude shipments received in the same period of 2015.
Earlier this year, 16 such teapot refineries came together in what is now the China Petroleum Purchase Federation of Independent Refineries. In the Shandong province, where most of these refineries are based, crude imports soared 303.1 percent by value in Q1 2016, compared to the same period last year.
In parallel with demand from local refineries, China’s appetite for imported crude is also explained by the authorities’ efforts to fill up the strategic petroleum reserves.
The rhythm of crude imports is going to increase amid the important role small refineries are starting to play, analysts highlight.
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“Their imports are still small compared to Sinopec or PetroChina, but their influence shouldn’t be neglected,” Bai Jun, a deputy director with an energy research institution affiliated with the National Development and Reform Commission, said.
For instance, Shandong Dongming Petrochemical, the biggest teapot refinery has an annual processing capacity of 15 million tons, of which 7.5 million tons are imported, equivalent to about 2 percent of China’s annual crude imports in 2015.
A total of 83 supertankers are now heading for the Chinese ports, with the operational capacity at the main hub Qingdao being overstretched.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com