China importing US crude oil to ensure energy security

Jun 4, 2018

From cars to aircraft, to daily commodities and clothes, crude oil is used for much more than just fuel. Take Sinopec, one of China’s major oil processing companies, its business scope covers oil and gas exploration and development, oil refining, chemical engineering and oil sales. Seats for the country’s National Stadium (commonly called Bird’s Nest) were produced by Sinopec.

As an experienced importer, US crude oil is not unfamiliar to Sinopec. The company became the first trader in the Asia-Pacific region to import US crude after the US lifted its ban on crude oil exports, and was the largest buyer in 2017. When being asked about its future plans, Sinopec gave an optimistic message.

“We imported 5.57 million tons of crude oil from the US in 2017, which accounted for 10 percent of US crude oil exports. We have a good foundation for cooperation with the US,” Lyu Dapeng, Sinopec’s spokesperson said.

Benefits for Asia

It’s good news for buyers worldwide that the US joined the rank of crude oil exporters. America has ambitions of becoming a net exporter of crude and liquefied natural gas (LNG), a development which would have a great impact on global energy markets.

Professor Zhou Dadi of the Energy Research Institute of the National Development and Reform Commission said the increase in US energy exports could finally benefit the whole of Asia.

“With more suppliers, all oil-importing and LNG-importing countries in Asia are striving to eliminate the Asian Premium,” he said.

For China-US crude oil trade, Zhou said, the decisive factor lies with the US, not China. The key is whether the US crude oil is competitive enough in the global market.

“Increasing trade between China and the US with crude oil and LNG could not only serve China’s energy security but also help to trim part of the US trade deficit with China. I think it’s a win-win situation for both. Yet the commercial competitiveness of US crude and LNG is the key factor determining whether they could be largely imported.”

Sinopec expresses the same concern. As an enterprise, cost-effectiveness carries the most weight in assessing import sources. The applicability comes next.

“When purchasing crude oil, Sinopec takes multiple factors into account. The most important factor is cost-performance. Aside from that, we care about the applicability of our oil refining equipment. We hope to decrease the cost while purchasing the most suitable kind of oil,” Lyu Dapeng said.

China aims at diversifying energy imports and welcomes as many sources of energy supply as possible. Once again, the decision is placed in the hands of market forces.

Source: CGTN

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