China reduced oil imports from Saudi Arabia even as the world’s largest crude exporter cuts prices to lure Asian customers amid intensifying competition from Colombia to Oman.
Oil deliveries from Saudi Arabia fell 2.7 percent to 4.74 million metric tons last month from a year earlier, according to data released today by the General Administration of Customs in Beijing. Shipments from Colombia surged 389.6 percent, while Russian deliveries increased by 56.8 percent.
Asian consumers are benefiting from a wider choice of suppliers offering cheaper crude, from Venezuela to Alaska and Nigeria, as the highest U.S. production in almost 30 years cuts American demand. Saudi Arabia reduced prices for oil for Asia to the lowest in almost six years as it aims to maintain market share even as global benchmark prices have dropped about 25 percent from June.
“Chinese refiners are favoring supplies from Oman and South America over Saudi Arabia as their prices relative to output are more competitive,” Amy Sun, an analyst with Shanghai-based ICIS-C1 Energy, a consultant, said by phone from Guangzhou. “China is also increasing imports from Russia with a new contract signed last year.”
Crude supplies from Colombia cost on average $94.56 a barrel last month and Brazilian imports were $95.27, while Saudi shipments were at $102.30 a barrel, Bloomberg calculations based on customs data show. PetroChina Co.’s Liaohe plant in northern China refined about 30,000 tons of Colombian crude as of Oct. 30 for the first time, its parent China National Petroleum Corp. said in a newsletter on its website yesterday.
State-owned Saudi Arabian Oil Co. on Oct. 1 cut prices for all grades and to all regions for November. The Asian price of Arab Light was cut by $1 a barrel to a discount of $1.05 to the average of Oman and Dubai crudes, the benchmark published by Platts, the energy-information division of McGraw-Hill Cos.
China Petroleum, Asia’s biggest refiner known as Sinopec, said it completed the expansion of its northern Shijiazhuang plant on Sept. 4, almost doubling the capacity to 8 million tons a year.
“Chinese refiners are also upgrading their facilities so that they can process heavier crude and cut the oil costs,” Sun said.
China trails only the U.S. in oil demand globally, according to the International Energy Agency in Paris. The Asian nation will import as much as 26 million tons a month of crude in the fourth quarter, forecasts ICIS-C1.-Reuters