What’s new: China’s crude oil imports and reliance on foreign oil declined for the first time in two decades, reflecting rising global petroleum prices, expanding domestic production and strengthened supervision of local refiners.
China's annual crude oil imports slid 5.4% in 2021, dropping for the first time since 2001. Meanwhile, China’s reliance on foreign oil, defined as the proportion of net crude oil imports relative to total oil consumption, declined by 1.6 percentage points to 72%, also the first decrease in 20 years, according to the China Petroleum and Chemical Industry Federation (CPCIF).
The rising price of crude was a key factor driving down imports last year, Fu Xiangsheng, vice chairman of the CPCIF, said Thursday at a press conference. The average price of benchmark Brent crude rose almost 70% in 2021 to $70.72 per barrel.
Since April, China has taken measures to regulate the use of imported crude by local refineries and cut import quotas for private refiners, also contributing to the decline in imports.
The background: China surpassed the U.S. in annual crude oil imports in 2017, becoming the world’s largest net oil importer. New refinery capacity and strategic inventory stockpiling combined with declining domestic oil production contributed to the rise in oil imports.
China controls imports of crude oil in a dual system under which state-owned oil giants such as PetroChina Co. Ltd. and China Petroleum & Chemical Corp. (Sinopec) hold import licenses without quantitative restrictions, while non-state-owned refiners are subject to import quotas and can use the quotas only for their own production and cannot resell them.
In April, officials from China’s economic planning agency began probing small refiners for suspected violations of tax and environmental rules as many private refiners failed to meet emission targets, threatening the country’s ambitious climate goals. Quota allocations were also halted while authorities investigate the industry.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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