On July 2, 2019, Reuters news agency reported that the government agencies in China (PRC) provided additional import quotas of another 56.85 million tons of crude oil by the end of this year to their largest refiners including 33 private and 10 state or provincial refiners.
Indian Air Defence System to Protect Delhi, Mumbai from China, Pakistan Attacks
The total amount of permitted import quotas for 2019 in the PRC will amount to 151 million tons, which is equivalent to 3.02 million barrels per day. Over the past four years, Chinese refiners continue to influence domestic oil demand in China, which contributes to maintaining stable world prices, globally.
Thus, the negative expectations associated with the 20% drop in the first batch of quotas in China in January, this year did not happen. Oil consumption in China continues to grow in 2019. Thirst for oil inside the Chinese economy is increasing, despite the influence of the ‘tariff trade war’ with the United States.
China is not able to meet its oil needs from its own sources, so in order to maintain economic development in recent years, China has been participating in oil and natural gas projects in more than 40 countries. Chinese companies are interested in gaining access to advanced technologies to increase production, efficiency and increase profits at their own as well as foreign mining enterprises.
In 2018, China imported oil to meet about 71% of its needs. According to the International Energy Agency (IEA), by 2035 this figure will increase to about 80%. The overall demand will also grow. China from year to year is becoming more and more import-dependent on oil, at the same time less – on natural gas. In 2018, China provided 44% of its demand for natural gas through imports. By 2035, according to the IEA forecasts, this figure will increase to 46%.
China is meeting its growing demand for oil and gas primarily from the resources of the Persian Gulf and after that from Africa, Russia and the countries of Central Asia. With the available sources of imports, China has to rely on shipping lines for the delivery of oil.
In 2018, about 78% of oil imports and 16% of natural gas imports went to China through the Strait of Malacca and the South China Sea. Despite China’s efforts to diversify its routes and energy suppliers, and over the course of the large foreseeable period, a major part of China’s imported oil and liquefied natural gas will enter it by sea. This makes China’s energy shipments strategic.
The potential local conflict between the United States and China in the South China Sea may not only threaten Chinese maritime communications, but also communications of US allies in the Far East. The South China Sea is of strategic importance for Japan, South Korea, and Taiwan as well as this these nations receive about 80% of their energy from this route.
Indian Military Base In Sabang, Indonesia Can Strangle China At The Strait of Malacca
The weak point for China clearly is the sea route. At the strategic Strait of Malacca, the 7th Fleet of the US Navy is deployed in Singapore. For the US allies in the South China Sea, the Far East is a weak point, where the Chinese Navy and Air Force are asserting control and dominance.
Malacca Strait
The construction of new or upgraded old oil pipelines from Russia and Kazakhstan to China demonstrates China’s interest in increasing the land supply of energy as an alternative to maritime risk. In early 2018, the capacity of the pipelines from Russia to China was doubled from 300 thousand to 600 thousand barrels per day.
In April 2017, an oil pipeline from Myanmar to China was commissioned. This pipeline, that stretches from the Myanmar port of Kyaukpyu to the southern Chinese city of Kunming, with a throughput capacity of 440,000 barrels per day, allows delivering oil to China by land, bypassing the US-controlled Malacca Strait.
A feature of the scheme is that Saudi Arabia and other countries in the Middle East and Africa supply crude oil for this pipeline by sea to the port of Kyaukpyu. Then, the oil is transported via the pipeline to China. The Kyaukpyu-Kunming pipeline has already been completed, but for the time being, due to the limited capacity at Kunming refinery, it will be operational at partial capacity for the next two years.
The key gas suppliers to China are Turkmenistan, Uzbekistan, and Myanmar. In 2018, approximately 28% of natural gas imports to China (46.7 billion cubic meters) came from Turkmenistan via a gas pipeline through Kazakhstan and Uzbekistan. This pipeline is designed to deliver 55 billion cubic meters of natural gas per year. But. Turkmenistan and China plan to expand it to 80 billion cubic meters per year in 2020.
The gas pipeline connecting China with Myanmar can supply 12 billion cubic meters of natural gas per year, but in 2018 only 3.04 billion cubic meters of gas was shipped to China.
As of June 2019, Russia has completed the construction of the Power of Siberia gas pipeline. Commissioning works are in progress, construction of a border compressor station is being completed, which will provide the required pressure for gas supplies to the PRC. Gas supplies via Power of Siberia from Russia to China will begin in December 2019 and will amount to 38 billion cubic meters per year.
According to preliminary data from the General Administration of Customs of China, imports of crude oil to China has increased by 15.7% in 2019, year-on-year to a record level of 10.48 million barrels per day. The report on the supplier of statistics on commodities, S & P Global Platts, states that for the first-time monthly imports of crude oil to China amounted more than 10 million barrels per day. The earlier record level was reached in April 2018 that amounted to 9.64 million barrels.
If compared to understand: 10.48 million barrels of oil per day of Chinese imports is only slightly less to record high oil production in Saudi Arabia – 10.72 million in November 2016. Chinese imports reached the level of production of the largest oil producer, Saudi Arabia. Thereby, Chinese thirst for oil is almost equal to the total production of Saudi Arabia.
Indian Naval Base in Andaman Island a Key “Cog in the Wheel” to Control Strait of Malacca
The cost of crude oil imported into the People’s Republic of China during 2018 amounted to $ 239.2 billion, that shows an increase of 46% if compared with 2017.
In 2018, China supplied its refineries crude oil from 46 countries. Approximately half (44.1%) of Chinese imports of crude oil account for nine countries in the Middle East, with payments ranging from $ 748.8 million from Qatar to $ 29.7 billion from Saudi Arabia.
The top-most suppliers of crude oil to China – the first fifteen countries in 2018 delivered 90.6% of the total crude oil imports to China. Together, the top five Chinese suppliers of crude oil — Russia, Saudi Arabia, Angola, Iraq, and Oman — supplied more than half (55.2%) of total Chinese imports of crude oil in 2018. And the top ten supplies was almost four-fifths (79%) of the volume of imported crude oil.
More News at EurAsian Times
- Indian Military Base in Vietnam To Protect Hanoi’s Territorial Interest
- Indian Military Base in Sabang can Strangle China at the Strait of Malacca
- Saudi Money, US Weapons, Israeli Intelligence Fuelling Arab NATO – Iran
- Will Ayni Airbase in Tajikistan Become India’s 1st Overseas Military Base?
- Indonesia Opens Another Military Base at Natuna Islands To Counter Aggressive China