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China`s Unipec faces uncertainty over its recent massive purchase of US crude after Beijing announced on Saturday that it was considering imposing a 25% import tariff on US crude oil in response to President Donald Trump?s similar decision on Chinese product imports.
Unipec. the trading arm of state-owned oil giant Sinopec. recently bought 16 million barrels. or eight VLCCs. of US crude for June loading and the cargoes are due to arrive in China over July-August after a 56-day voyage. This was Unipec`s largest purchase of US crude ever and was only roughly 2 million barrels less than its monthly crude imports from Saudi Arabia. traditionally its biggest supplier.
All crude oil imports into China are currently exempt from tariffs.
`This will have a big impact on Unipec`s business and feedstock supplies for Sinopec refineries. They need to wait until the policy is clear as the effective date for the [implementation of the] tariff on US crude is yet to be announced.` a Beijing-based source with knowledge of the matter told S&.P Global Platts on Saturday.
`Sinopec is likely to lobby Beijing.` the source said. adding that Unipec`s US crude shopping was more or less in support of Beijing`s previous effort to narrow its trade deficit with the US.
As the June-loading US crude cargoes are expected to arrive in China in July August. they might need to find another home if Beijing were to impose the 25% tariff before they arrive.
It also means the trading company will have to find other supplies to feed Sinopec`s refineries.
Sinopec recently cut back its nominations for Saudi crude by 40% of the total monthly allocations for May-July loading in response to the higher-than-expected official selling prices set by Saudi Aramco.
Company sources said then that Sinopec would get enough supplies from other producers. such as Iran. Iraq. Russia and the US.
Sinopec had said last year that it would raise its crude shipments from the US by around 80% to 200.000 b d in 2018 from 112.000 b d last year.
More Sinopec refineries have started to process US crude. most of which are medium sour grades such as Mars and Southern Green Canyon. although light crudes such as WTI. Bryan Mound Sour. and even shale oil from Eagle Ford have joined the flow.
