A supply and storage center for crude from Russia in Daqing, Heilongjiang province. Russia became China's biggest crude supplier in May, overtaking Saudi Arabia, as the global competition for oil intensified. (Photo/Xinhua)
Russia became China's biggest crude supplier in May, overtaking Saudi Arabia, as the global competition for oil intensified.
China imported a record 3.92 million metric tons of Russian crude during the month, or 927,000 barrels a day, according to data from the General Administration of Customs on Tuesday, a 20 percent increase on April.
Saudi Arabia has slipped to China's third-largest crude supplier, after Russia and Angola.
The Gulf oil giant exported 42 percent less crude to China compared with the previous month to 3.05 million metric tons, the equivalent of 722,000 barrels a day, according to customs data.
Last year, China imported around 33 million tons of crude from Russia, a 36 percent increase compared with the previous year, according to Wind Information Co, a financial research provider.
Gao Jian, an oil analyst at Sublime China Information, a domestic commodity consultancy, said Russia agreed to settle all of its crude sales to China in renminbi earlier this month, which boosted crude exports to the country.
"The application of renminbi in global oil trading will become a trend as global crude supply increases and China becomes an important buyer with a bigger say," Gao said.
According to BP Plc's annual energy report, the United States is now the world's largest oil and natural gas producer, and China's energy consumption growth is slowing because of the country's control of its energy-intensive industries.
"All those factors have converted the global crude trade from being a seller's market into a buyer's market," Gao said.
According to estimates from the Paris-based International Energy Agency, China, which is the world's second-largest crude user, will account for 11 percent of world demand this year, making it a key target market for major exporters including Russia, Saudi Arabia and Iraq.
Li Yan, a crude analyst with Shandong Longzhong Information Technology Co Ltd, said Saudi Arabia is losing market share because it is having to compete with other suppliers on price.
"Russia's weak domestic economy needs help from China. The crude trade between the two countries has become an effective tool for their strategic and political cooperation," he said.
It is the first time since October 2005 that Russia has become China's top crude supplier, but Moscow has been forced into finding new markets for its crude amid Western sanctions over its ongoing conflict with Ukraine.
Energy cooperation between the two countries is not limited to crude.
In November, they signed a 30-year gas supply contract, making China the biggest consumer of Russian gas.
The new supply will come through China's western border and is in addition to a $400 billion deal between the nations to deliver 38 billion cubic meters of gas annually to China via an eastern route, starting in 2018.