China becomes world’s largest oil importer

2018-02-07 09:38Global Times Editor: Li Yan ECNS App Download

Development of renewables, electric cars may ease foreign dependence

With China having overtaken the U.S. to become the world's largest oil importer in 2017, experts forecast a marginal increase in 2018 with a cyclical peak possible in 2020 or shortly thereafter.

China surpassed the U.S., the former No.1 crude importer, in annual gross crude oil imports in 2017, importing 8.4 million barrels per day (bpd) compared with 7.9 million bpd for the U.S., according to a report by the U.S. Energy Information Administration (EIA) published on Monday.

The EIA said that the increase in imports was mainly due to added refinery capacity and strategic stockpiling, coupled with shrinking domestic oil production.

Given the expected decline in China's crude oil output, the EIA report forecast China's crude imports will likely continue to rise over at least the next two years.

Jin Lei, an associate professor at the China University of Petroleum, said last year's 10 percent increase was the result of relatively stable global crude prices. Customs data showed that 2017 crude oil imports stood at 420 million tons.

"With global crude prices likely to move up to about $60 per barrel, the rise in China's crude imports will be held to less than 10 percent but the overall trend of growing will not change this year," Jin told the Global Times on Tuesday.

As to when China's crude imports will peak, Jin said "soon."

"Probably [a peak will appear] at sometime after 2020, due to the possible mass use of new-energy cars and hybrids, rising consumption of natural gas and expanded use of other alternative energy sources such as renewables," Jin said.

Jin said it is difficult to predict at this time whether China's crude oil imports will remain at a plateau after 2020 or increase again.

"In the long run, if alternative sources don't materialize as predicted, and demand continues to rise, crude imports will keep growing," Jin said.

However, Chen Ruibi, chief energy analyst at Shanghai-based Hicend Futures Co, said that there is "no way" China's oil imports will peak in the short or medium term.

"Despite some successes, China's economic restructuring could not be done overnight. The near-term needs of development mean that China can't escape its reliance on traditional energy sources, of which crude oil plays a major role," Chen told the Global Times.

Considering the limited number of domestic oil fields that are both economically and technologically recoverable, China can't do much about its heavy reliance on imported crude, Chen said.

Chinese oil giants have weighed in on the issue in recent days.

The China Petroleum and Chemical Industry Federation, an industry body, said that China's apparent demand (domestic production plus net imports) could rise 5 percent to 630 million tons in 2018, according to media reports on Tuesday.

The federation issued forecasts for several benchmark types of crude this year. For U.S. West Texas Intermediate, the price will average $55 per barrel; for international benchmark Brent, it will be $60 per barrel and for Daqing (a major crude production base in Northeast China) crude, the average will be $53 per barrel.

China's apparent crude demand will reach 615 million tons in 2018, rising 4.6 percent year-on-year, industry news site reported on January 17, citing a report by a research institute affiliated with the State-owned giant China National Petroleum Corp.

China's reliance on imported crude in 2017 represented 67.4 percent of its demand, the report said. It also said the net import crude volume will be 423 million tons in 2018, up 6.7 percent from 2017.

As for refined products, demand may rise 3 percent in 2018, according to a report issued by oil and gas giant Sinopec Corp on Thursday.

With a decline in imports from the Middle East, the U.S. and Brazil will grow into important sources of crude imports for China, while Russia is set to remain the largest source, said the Sinopec report.

Jin said China will have increasingly diversified energy sources.

"In addition to the decline in the proportion of OPEC crude, shale oil from the U.S. and Chinese exploration results in the Arctic Ocean could supplement China's energy resources," Jin said, noting that oil from Central Asia, Latin America and Africa will be alternatives to OPEC oil.

"In terms of energy security, the pipelines [Central Asia, Russia and Myanmar] are among the first to be secured. Ports in Pakistan could be used to transport oil overland to circumvent sensitive areas," noted Jin.


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