China’s loadings of West African crude are set to hit their highest in more than two years in November as the nation’s refineries race to stock up and offset falling domestic oil production, according to a Reuters survey of shipping fixtures and traders.
China’s November West African crude oil loadings, the bulk of it Angolan, are on track to reach 1.2 million barrels per day (bpd), the highest since September 2014, the survey showed on Monday. December bookings are already expected to be similarly strong.
“Domestic production declines and stockpiling continue to generate demand for crude,” said Michal Meidan, Asia analyst with Energy Aspects. “Chinese refiners are also raising runs after the end of heavy maintenance which ended in September and ahead of the Chinese New Year, which is quite early this year in late January.”
Meidan said independent refineries, known as teapots, are keen to import before the end of the year to ensure the government renews its import quotas in 2017.
Angola has been battling Russian and Saudi Arabia for the spot as China’s top supplier, and Middle Eastern producers have been offering cargoes under more lenient payment terms in order to secure a market share.
But China’s domestic production, which dropped by 9.8 percent year-on-year in September, is similar in quality to Angolan oil, said Ehsan Ul-Haq, principal consultant with KBC, making it an attractive alternative.
“Beijing needs Angolan crudes,” said Ul-Haq said. “Although China wants to diversify its crude slate, Angola has been and will remain a key ingredient of its refiners’ diet.”
According to Clipperdata, an industry firm that tracks crude movements, China’s imports of Angolan oil in the first nine months of 2016 stood nearly 100,000 bpd higher than a year earlier.
Already, Chinese firms including Unipec and CNOOC have booked spot cargoes of Angolan oil for December loading, on top of term cargoes that included seven awarded to Sinochem alone.
The strong bookings to China helped to balance out a small decline in November loadings to India, Indonesia and elsewhere, holding overall West African exports to Asia at 1.9 million bpd.
Source: Marine Link