China imported 8.4 MMBOPD
China took the crown as the world’s largest crude oil importer in 2017, according to a note released by the EIA today.
China imported an average of 8.4 MMBOPD in 2017, compared with 7.9 MMBOPD for the United States. This is a new record for China, which has seen crude imports grow steadily for more than ten years. New refinery capacity and inventory buildups in China combined with declining local production to set yet another high for Chinese oil imports.
China has been largest net importer since 2013
While 2017 was the first year Chinese gross oil imports surpassed those of the U.S., the country has been the largest net importer since 2013. American companies have been exporting oil for several years, a business that expanded significantly after the export ban was lifted in late 2015. The U.S. is now exporting significant volumes of oil, decreasing its net imports by about 1 MMBOPD. China, on the other hand, exports virtually no crude oil, as declining domestic production falls well short of consumption.
Local production declining, local refining growing
China had the largest decline in domestic crude production among non-OPEC countries in 2016 and will have the second-largest decline in 2017. This trend is not likely to reverse any time soon, as the EIA predicts further declines in both 2018 and 2019.
While Chinese production is falling, consumption of oil is growing. The country consumed 13.2 MMBOPD in 2017, 3% higher than demand in 2016 and the ninth consecutive year of growth. Further boosting Chinese demand is the country’s recent reform of its refining sector. China has reduced restrictions on imports and exports, and granted import licenses to independent refineries.
Chinese refining capacity has also grown in the past year, increasing demand. A 260 MBOPD refinery in Yunaan province started operating in Q3 and the CNOOC refinery in Huizhou increased capacity by 200 MBOPD. The EIA reports China’s refinery runs grew by about 500 MBOPD to 11.4 MMBOPD in 2017. Press reports indicate as much as 1.4 MMBOPD of new refining capacity is planned to open in China in the next two years, so further increases in imports are likely.
Russia, Saudi Arabia largest Chinese suppliers
The U.S. is not a major supplier to China yet, as the country imports from a wide variety of sources. Russia is China’s largest source of foreign oil, providing the country with 1.2 MMBOPD in 2017. Saudi Arabia, by contrast, exported 1 MMBOPD to China in 2017. In the past five years, China has increasingly turned to non-OPEC countries for oil, as OPEC’s market share in the country has declined from 67% to 56% in that period. Russia and Brazil have seen the largest growth in China, as Russian market share grew from 9% to 14% and Brazilian market share rose from 2% to 5% in that period.
