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UPDATE 1-Russia beats Saudis as top China crude supplier for 4th month in 2015
January 26, 2016 / 10:03 AM / 2 years ago

UPDATE 1-Russia beats Saudis as top China crude supplier for 4th month in 2015

* Russia hits monthly record at 1.13 mln bpd for Dec

* China’s 2015 crude imports from Saudi Arabia up 1.8 pct

* China crude imports from Russia up 28 pct

* Imports from Iran down 3 pct in 2015 at 532,300 bpd

By Chen Aizhu

BEIJING, Jan 26 (Reuters) - Russia beat out Saudi Arabia as China’s top crude oil supplier for the fourth month in 2015 in December due to robust demand from independent Chinese refiners that prefer shipments from the Far East over high-sulphur barrels from the Middle East.

Russia strengthened its position in Asia by supplying nearly a quarter more crude to the region in 2015, shifting the balance of power in one of the few bright spots in the global market and blunting the Organization of the Petroleum Exporting Countries’ high-profile drive to win customers.

China is one of the top targets for Russian oil after small, independent oil plants nicknamed “teapots” won the right to import crude for the first time just several months ago and hectically started placing orders towards the end of last year.

“These new plants were in a rush to use new quotas. But logistically they are not equipped to buy larger shipments from the Middle East or West Africa,” said a Beijing-based official involved in marketing Middle Eastern oil.

“Russian cargoes, like ESPO, suit them.”

China’s December imports from Russia hit a record of 4.81 million tonnes, or 1.13 million barrels per day (bpd), up 29 percent over a year ago, Chinese customs data showed.

Imports from Saudi Arabia, the world’s top exporter, were down 1.2 percent on year last month at 1.05 million bpd.

“It’s not quite unexpected that Russia has surpassed Saudi Arabia in becoming the largest crude supplier to China once again. This has been partly driven by greater demand from teapots,” said Wendy Yong of FGE Consultancy.

Russia outpaced most of the top suppliers last year in boosting sales to China, with volumes up 28 percent or nearly 186,000 bpd over 2014, partly attributable to increased sales via the ESPO pipeline and also shipments by rail.

That compared with Saudi Arabia’s 1.8-percent growth last year and the 12.3-percent rise in Iraqi supplies.

As China’s No.2 supplier last year, Russia could further narrow the gap with the Saudis in 2016, as demand is expected to grow from the teapots that have together won 1.45 million bpd in crude quotas, or about 20 percent of China’s total imports.

IRAN IMPORTS DOWN 3.1 PCT LAST YEAR

China, Iran’s largest oil client, bought 12 percent less Iranian crude oil in December versus a year ago at 530,600 bpd, taking imports for the whole of last year down 3.1 percent over 2014, according to data from the General Customs Administration.

The 3.1 percent fall in 2015 imports, averaged at around 532,300 bpd, was largely because of an outage at one of Iran’s regular clients, a private petrochemical maker that was forced to shut its plant after a fire in April for safety checks.

Iran, which emerged from years of economic isolation earlier this month, has extended annual contracts with its top two Chinese buyers - Sinopec Corp and Zhuhai Zhenrong Corp - at steady volumes for 2016, and is discussing ramping up exports with other potential buyers in China.

Sinopec, Asia’s top refiner, and state trader Zhuhai Zhenrong are together contracted to lift around 505,000 bpd of Iranian crude in 2016, roughly half of the Islamic Republic’s total current exports.

Additional reporting by Florence Tan in Singapore; Editing by Tom Hogue

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