EIA: Refiners in China Increase Crude Oil Processing and Imports in 1H23

Refiners in China processed and imported record volumes of crude oil in 1H23, sourcing much of the additional crude oil runs from Russia, Iran, Brazil, and the US. These increases, sparked by China’s initiatives to ease COVID-19 mobility restrictions and reopen its economy, are a return to a more than a decade-long trend of expanding crude oil processing in China following declines in 2022.
According to its National Bureau of Statistics, refiners in China processed a record-high 14.7 million bpd of crude oil in 1H23, an 8% increase from 2022’s annual average of 13.5 million bpd and a 4% increase from 2021’s record-high annual average of 14.1 million bpd. New refinery capacity was partly responsible for the record-high crude oil processing. Shenghong Petrochemical’s 320 000 bpd refinery in Lianyungang began operations in November 2022 and PetroChina’s 400 000 bpd Jieyang refinery began trial runs in February 2023.
To process record-high volumes of crude oil, refiners in China imported record-high volumes of crude oil in 1H23. China imported an average of 11.4 million bpd in 1H23, a 12% increase from 2022’s annual average of 10.2 million bpd and a 5% increase from 2020’s previous record of 10.8 million bpd.
China releases several crude oil import quotas every year, assigning a set volume of imports to a select few, mostly state-owned, refiners. In October 2022, three months earlier than expected, China announced its first batch of crude oil import quotas for 2023, indicating that it hopes to boost crude oil imports and processing to satisfy an expected increase in domestic demand. China maintained higher import quotas in 2023 than in 2022, announcing a second batch of import quotas in January and a third batch in June. These crude oil import quotas are about 20% above those set for 2022 and have allowed record-high crude oil imports and processing so far in 2023. In addition to higher crude oil imports, refiners in China also boosted fuel oil imports, particularly from Russia. Fuel oil is often used as refinery feedstock by small, independent refiners that have not been granted crude oil import quotas and by state-owned refiners that have exhausted their quotas.
In 1H23, China increased imports from all but three of the 14 countries that it imported an average of at least 100 000 bpd of crude oil from in 2022, according to China Customs Data. Compared with 2022 averages, China increased imports from Russia by 400 000 bpd (23%); from Saudi Arabia by 130 000 bpd (7%); from Brazil by 250 000 bpd (49%); and from the US by 200 000 bpd (124%). Customs data also indicates that imports from Malaysia increased 330 000 bpd (46%); however, the volume of imports from Malaysia exceeds Malaysian production. Industry analysts indicate that much of the oil that was shipped from Iran to China was relabelled as originating from countries such as Malaysia, the UAE, and Oman to avoid sanctions. The increase in crude oil imports from Brazil is a return to historical averages before Russia’s full-scale invasion of Ukraine.
China increased imports the most from Russia, and in 1H23, Russia passed Saudi Arabia to become China’s largest source of crude oil imports. From 2019–2021, China sourced 15% of its crude oil imports from Russia. Following Russia’s full-scale invasion of Ukraine in February 2022, China began importing a higher share of its total crude oil imports from Russia, likely because of the discounts that Russia offered on its crude oil sales. China sourced 18% of its crude oil imports from Russia in 2H22 and 19% in 1H23. The 2.6 million bpd of crude oil that China imported from Russia in June 2023 is the most China has ever imported from any country.

About Parvin Faghfouri Azar

Check Also

Over 110 Countries Support Tripling Renewables by 2030

More than 110 countries want the COP28 climate negotiations to adopt a goal of tripling …

Leave a Reply

Your email address will not be published. Required fields are marked *