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24 Nov, 2017 09:54

Russia cements position as China’s largest oil supplier

Russia cements position as China’s largest oil supplier

Statistics from the China General Administration of Customs shows Russia held the crown as the country’s top crude oil supplier for the eighth month in a row in October, exporting more than one million barrels per day (4.649 million tons).

Saudi Arabia came in a close second, with last month’s supplies up 16 percent from a year ago at 1.086 million barrels per day (bpd). China’s third biggest crude supplier was Angola, delivering 45.3 percent more crude oil versus a year earlier at 839,840 bpd.

Supplies of oil from Iraq fell by 29 percent in annual terms, to 2.65 million tons. In September the figure was 3.43 million tons.

Exports of Russian oil to China have more than doubled over the past six years, up by more than 550,000 barrels per day. The Saudi share of Chinese crude imports at the beginning of the decade was about 20 percent, while Russia's was below seven percent.

In 2011, Russia began supplying China with crude through the Skovorodino-Mohe branch of the ESPO pipeline. That followed Rosneft, Transneft, and China National Petroleum Corporation’s (CNPC) signing agreements.

In 2014, Rosneft and CNPC inked a 25-year oil deal worth $270 billion under which the Russian company is expected to supply 360.3 million tons of crude to China. Since then Russia has overtaken Saudi Arabia to become China's most significant crude supplier.

This week, Russian oil major Rosneft inked a deal with China’s CEFC Energy for crude oil deliveries starting next year. The company will supply CEFC with 60.8 million tons of oil annually until 2023.

According to the Russian producer, the deal will increase direct supplies of crude oil to the “strategic Chinese market and ensure a guaranteed cost-efficient export channel for the company's crude sales.”

Experts say Chinese imports of Russian oil are likely to stay high over the coming years due to long-term crude supply contracts and rising demand from the world's second-biggest oil consumer.