China bought a record volume of crude from Russia last year while shipments from Saudi Arabia shrank for a second year as the Asian nation took steps to diversify its sources of oil supply.
China’s imports from its northern neighbor increased by 36 percent in 2014, the fastest pace ever, to 33.1 million metric tons, according to General Administration of Customs data e-mailed on Jan. 23. That’s about 665,000 barrels a day. Exports from Saudi Arabia, which remains the biggest supplier, totaled 49.67 million tons in 2014 or 997,000 barrels a day, the least since 2010. The kingdom’s share of China’s crude purchases dropped to 16 percent from 19 percent in 2013.
China, the world’s second-largest oil consumer, is benefiting from a wider choice of suppliers amid a global glut fueled by the highest U.S. production in more than three decades. The country’s 2013 agreement with OAO Rosneft could see it becoming Russia’s biggest crude export market in 2018.
“China’s surging imports from Russia is mostly a reflection of their oil-supply contracts that would continue to grow for decades to come,” Gao Jian, an analyst at SCI International, a Shandong-based energy consultant, said by phone. “China is already on track to diversify crude purchases and with its oil demand stabilizing, imports from its traditional suppliers will be displaced.”
Russia Pipeline
Russia overtook Oman as China’s third-largest supplier last year and sold crude at an average of $103 a barrel, the customs data show. Under the 2013 deal, Rosneft may boost oil flows to China through a spur from the East Siberia-Pacific Ocean pipeline to 20 million tons a year from 2015 to 2017, possibly rising to an annual 30 million tons for the 20 years from 2018. In return, the Moscow-based company obtained $2 billion in loans from China Development Bank Corp. and advanced payment for part of the oil deliveries.
Saudi Arabia reduced its official selling prices for November crude sales to Asia to the lowest since 2008 as it sought to defend market share in the fastest-growing demand region. China’s imports from the kingdom climbed 13 percent in December from the previous month, the first gain since September. December cargoes were sold at $75 a barrel, compared with the full-year average of $101.50.
Angola retained second spot among suppliers last year with 40.6 million tons of sales, or 816,000 barrels a day, at an average $103.70 a barrel, according to the data.