Caixin
Dec 27, 2019 07:10 PM
BUSINESS & TECH

Saudis Best Russians, Holding Onto China Oil Supplier Top Spot

China brought in 8.21 million tons of crude oil from Saudi Arabia in November.
China brought in 8.21 million tons of crude oil from Saudi Arabia in November.

Chinese imports of Saudi Arabian oil soared in the first 11 months of this year, boosted by several massive new refining joint ventures, helping the Middle Eastern country retain its lead over Russia as China’s top supplier. Meanwhile, oil imports from Venezuela and Iran slumped further amid U.S. sanctions, according to customs data released on Thursday.

China brought in 8.21 million tons of crude oil from Saudi Arabia in November, which pushed the total import volume from Saudi Arabia in the first 11 months to a record 76.33 million tons, up 53% year-on-year. That surpassed the 70.3 million tons of oil imported from Russia, up 9% from the same period last year, and 47.08 million tons from Iraq, up 13.7% year-on-year.

It was the second month in a row that China imported no oil from Venezuela, and imports from Iran fell 47% year-on-year to 14.36 million tons for the year to November.

This came in part as Saudi Arabia has been aggressively expanding its downstream business by setting up a batch of Sino-Saudi joint ventures in petroleum refining, storage and sales, in an effort to shore up one of its most important markets. That drive has gained added urgency following the IPO of state-owned oil conglomerate Saudi Aramco earlier this year.

Two Sino-Saudi refining joint ventures with a combined output capacity of 60 million tons per year — Hengli Petrochemical and Zhejiang Petrochemical — were granted oil import quotas totaling 24.3 million tons in 2019. That figure is expected to keep growing, as Hengli’s first round quota for 2020 jumped 150% from last year to 10 million tons, and Zhejiang Petrochemical’s quota doubled to 8 million, according to the state-run Shanghai Securities News.

In addition, Brazil has moved up one spot to become China’s fifth largest supplier this year, with 37 million tons of exports to China for the year to November, up 16.6% year-on-year. This may have been helped along by a production surge in the country, where daily output spiked 20.4% year-on-year in November to 3.1 million barrels a day, according to the Brazilian government.

Hounded by the prolonged U.S.-China trade war and a 5% tariff on U.S. oil starting from Sept. 1, China only brought in 6.35 million tons of crude oil from U.S. in the first 11 months of the year, down 48% from the same period in 2018.

China’s total crude oil imports reached a record high of 45.74 million tons in November, pushing the total import volume up 10.4% year-on-year to 462 million tons in the first 11 months. If the growth rate holds up in December, China will break the 500-million-ton annual import mark for the first time.

Contact reporter Yutong Lu (yutonglu@caixin.com)

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