China’s crude oil imports in 2022 rebound on new refineries and inventory replenishment

Band Chen Aizhu

SINGAPORE, January 28 (Reuters)China’s crude oil imports could rebound 6-7% this year, reversing the rare 2021 dip as buyers step up purchases for new refining units and to replenish low inventories, analysts and industry officials said. oil companies.

Robust demand from China, which accounts for a tenth of global crude trade, would help support global oil prices, keeping supplies tight amid forecasts of a jump in crude prices at $100 per barrel or more.

Demand recovery, however, is not expected until the second half of the year as China continues to battle COVID-19 outbreaks and limit output from smaller refiners.

For 2022, crude oil imports into China are expected to increase by 600,000 to 700,000 barrels per day (bpd), offsetting those of last year. 590,000 bpd drop to match or beat the 2020 record volume of 10.85 million bpd, analysts at FGE, Rystad Energy and Energy Aspects told Reuters.

Brent and West Texas Intermediate futures LCOc1, CLc1 are already at 7-year highs near $90 a barrel as investors look past the demand hit by the Omicron variant. WHERE

“We expect Chinese refineries to grow by 500,000 bpd, driven mainly by the commissioning of new refining capacity in 2022 and the transport and aviation fuels recovery accelerating in the second. semester,” said Julie Torgersrud of Rystad Energy.


Imports are expected to start slowly at first as Beijing’s zero-tolerance virus measures keep fuel demand capped, while lower import quotas and narrowing refining margins will limit production. output from independent refiners.

Refinitiv data showed January arrivals were 41.13 million tonnes (9.69 million bpd), down from 44.6 million tonnes in January 2021 and 46.1 million tonnes two years ago.

A possible release of state oil reserves (SPR) in the coming weeks will also dampen purchases by national oil companies, analysts said.

Demand is expected to pick up later in the year, driven by new refining capacity at integrated petrochemical producers, particularly Zhejiang Petrochemical Corp and Jiangsu Shenghong Petrochemical.

“We expect crude imports to increase by 600,000 bpd year-over-year, driven by new capacity and a return from storage,” said FGE analyst Mia Geng.

East China-based Zhejiang Petrochemical, the country’s largest refiner, aims to run its newly built 800,000 bpd crude units at full capacity this year, two company executives said. This will represent an increase of 280,000 bpd compared to 2021.

Newly commissioned Shenghong Petrochemical is expected to enter commercial service in May at its 320,000 bpd plant in Lianyungang, two other sources said.

Another greenfield plant, the 400,000 bpd Jieyang Petrochemical invested by PetroChina in the southern province of Guangdong, could start trials in the third quarter, sources added.

Shenghong declined to comment. PetroChina and Zhejiang Petrochemical did not immediately respond to requests for comment.

Analysts have warned that the rise of domestic companies could be partly offset by Beijing’s broad restriction on the treatment of refineries through policies that include the reduction of import quotas for small refiners, as well as measures to reduce fuel exports to combat carbon emissions.

“It has become increasingly clear that the share of smaller independents is likely to continue to decline this year amid a series of clampdowns,” said Shi Fenglei, China-based analyst at IHS Markit.


Restocking of oil reserves is also expected to boost second-half buying, led by state refiners Sinopec 600028.SS and PetroChina 0386.HK after a sharp drop in stocks estimated last year.

Total onshore crude oil inventories, excluding underground storage difficult to detect by satellites, fell by 140 million barrels last year, Vortexa Analytics estimated, which a market source said was probably the largest drawdown since 2015.

China has started filling its reservoirs in recent weeks, putting 4 million barrels of Iranian oil into reserve reservoirs in southern China, Reuters reported.

Unipec, the trading arm of Sinopec, also swept millions of barrels of crude from the United States, Russia and the Middle East this month in an unusual buying spree, traders said.

The extra supply could be used to boost refining output after the Lunar New Year and to replenish inventories, they said.

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(Reporting by Chen Aizhu; additional reporting by Florence Tan; editing by Richard Pullin)

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