China Oil Imports Hit Another Record In January

Crude oil imports to China hit another record last month, reaching 9.57 million barrels daily, for a total of 40.64 million tons, customs data showed. This is 400,000 bpd more than the previous record from March last year. Natural gas imports also continued to rise, hitting 7.7 million tons – the second-highest monthly import rate on record.

The increase in oil imports was driven by independent refiners, the so-called teapots, who rushed to utilize their higher crude oil quotas that Beijing issued late last year. Also, a Rosneft pipeline began operating at an expanded capacity on January 1, which increased the flows of crude into the country. China’s demand for both oil and gas is higher ahead of the Spring Festival, which starts next week, Reuters notes.

The increase in gas shipments and pipeline flows came after several supply outages due to a gap between demand for the fuel and available distribution infrastructure, so China bought more gas to avert further outages as it rushes to build the infrastructure that will help it with its ambitious plan to cut coal dependence and shift to natural gas.

Independent refiners received quotas that were 55 percent higher than last year’s, so the import increase could be extended despite the higher oil prices.

Last year, China turned into the world’s top oil importer as its crude oil imports exceeded those of the U.S. on a monthly basis for most of the year. Now Chinese crude oil import volumes also surpassed the American imports in annual figures, as it brings more refining capacity online and fills strategic inventories, while domestic oil production continues to decline.

Chinese crude oil imports will continue to grow over the next few years as the use of oil products grow along with the economic and refinery capacity expansion, analysts say. The country’s import dependence is also expected to grow as imports rise and production at home declines.

By Irina Slav for Oilprice.com