Russia held its spot as largest oil exporter to China for the eighth consecutive month in October, data released last week by the Chinese General Administration of Customs (GAC) show. Russia’s crude exports to China during the month amounted to 4.65 million tonnes (1.1 million bpd).
Year on year the October figure was down by 1.9% and below the September record for Russian imports of 1.55 million bpd. Russian crude supplies rose 15.9% year on year in the first 10 months of 2017 to 49.65 million tonnes (1.2 million bpd).
Russia delivers crude to China via the Skovorodino-Mohe branch of the 4,188-km Eastern Siberia-Pacific Ocean (ESPO) pipeline. ESPO also pumps oil to Kozmino, where it is loaded onto tankers and shipped to Chinese, Japanese and South Korean ports.
China National Petroleum Corp. (CNPC) and Russia’s Rosneft in 2014 signed a 25-year agreement worth US$270 billion for the delivery of 360.3 million tonnes (2.64 billion barrels) of Russian crude. In September, China’s CEFC Energy signed a five-year deal with Rosneft for 60.8 million tonnes (244,000 bpd), with deliveries beginning in January 2018 and concluding in 2023. Most of the oil in the deal will be transported through ESPO, but about 20% will be Urals or Sokol blend crude.
As OPEC gathers in Vienna this week to discuss whether to continue with its production cuts, questions persist about China’s future oil demand. Some Chinese analysts see China’s oil demand growing by less than 5% in 2018 owing to the fact that its domestic market is well supplied with products.
During the first 10 months of 2017, China imported 8.41 million bpd of crude oil, up by 12.2% year on year, according to GAC data.
Saudi Arabia was China’s second largest supplier with an average of 1.09 million bpd, up 16% from a year ago, while Angola held third place with 839,840 bpd of deliveries.
Saudi Arabia is China’s traditional leading crude oil supplier, but it has seen its market share slip in the wake of OPEC production cuts designed to reduce the market glut.
Meanwhile, US exports to China amounted to 878,623 tonnes (207,750 bpd) in October. The US began supplying oil to China in late 2016 and since the start of this year has delivered 5.6 million tonnes (135,300 bpd). US company Continental Resources, a major produce of shale oil from the Bakken reservoir, will soon ship its first sale of 1.01 million barrels of light, sweet crude to China.
US oil exporters are expected to lead the growth in global oil exports over the next 10 years. US crude exports averaged 1.59 million bpd for the week of November 17, up from 1.13 million bpd the week before, according to data from the US Energy Information Administration (EIA).