China’s fast-growing refining capacity has fueled its crude demand, raising the prospect that the Dragon might soon replace the US as the world’s biggest oil importer.
Sitting on excess capacity, Chinese refiners might try to step up export, posing new competition for India refiners catering to the global market.
China is already putting a lot of pressure on the traditional export hubs of Taiwan, Korea and Singapore to capture the market share within Southeast Asia and Australia.
China plans to add at least 2.5 million bpd of refining capacity by 2020, according to a recent presentation by Sinopec, which is Asia’s biggest oil refiner and the parent of Unipec.
Exports of gasoline from China are expected to increase by at least 10,000 barrels per day this year from 2016, driving overseas gasoline sales to between 235,000 bpd and 240,000 bpd this year and about 330,000 bpd in 2018, industry estimates show.
The trend of more refining capacity and higher exports is set to continue, say energy analysts.
According to available statistics, China, for the first time, imported more crude oil in the first half of the year than the US. China averaged 8.55 million barrels per day (bpd) versus 8.12 million bpd in the US, a trend that economists expect would last in coming years.
Chinese state-run oil trader Unipec is now the world’s biggest physical oil trader.
China’s import surge is being driven by the expansion of its refinery capacity. But, as the domestic demand has not materialized to soak up the fuel supply, China’s exports of petrol and diesel have hit record highs. This flood of products has caused headaches for competitors across Asia and depressed diesel profit margins to multi-year lows in 2016.
Energy experts feel that by drawing more of the world’s oil to its shores, China, the second-biggest oil consumer after the US, will play a crucial role in setting the global price of the commodity, especially as the crude futures market in Shanghai develops.