China's March To Biggest Oil Importer Hits US Shale Roadblock
(Bloomberg) -- The world’s biggest oil importer. The title nobody wants.
For decades the U.S. held undisputed rights to the crown. Last year, China squeaked ahead for the first time amid growing demand and as rising U.S. shale production displaced overseas deliveries. The Middle Kingdom looked poised to become the center of the crude importing world.
Then $30 oil happened. U.S. drillers shut the most rigs in modern history, production began to fall and imports have rebounded. Chinese oil firms also shuttered output and kept demand growing. Now the two are neck and neck.
“I don’t think any country would want to boast about being the world’s largest importer of crude,” said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. “Who gets more nervous during OPEC meetings? Who’s more vulnerable to supply disruptions, geopolitics or resource nationalism?”
The one group with no reason for dismay is the Organization of Petroleum Exporting Countries, which needs buyers to soak up a supply glut that has cut prices in half from two years ago.
The U.S. imported 8.04 million barrels of oil a day in March, according to the Energy Information Administration, the most since August 2013 and about 330,000 more than China did in the same period. U.S. output has fallen 5.9 percent since peaking in April 2015, and drillers have idled 80 percent of the country’s oil rigs since October 2014.
The increase in U.S. imports comes after years of declines due to increased shale production. Meanwhile Chinese economic growth has boosted imports four-fold since the beginning of 2005, making the country the second-largest consumer in the world. China imported more oil than the U.S. in a month for the first time in April 2015 and again in February.
China’s crude production dropped by the most in 15 years in May as producers from PetroChina Co. to Cnooc Ltd. reduce drilling in unprofitable fields. Lower domestic output will increase the country’s dependence on imports from the Middle East and Russia, Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong said in an e-mail. China also recently allowed smaller independent refineries, known as teapots, to begin importing oil directly, creating new buyers.
“I don’t see the U.S. overtaking China on a consistent basis,” said Amrita Sen, chief oil economist for Energy Aspects Ltd. in London. “Especially since China now has sustainably higher crude demand from teapot refineries.”
--With assistance from Sarah Chen. To contact the reporter on this story: Dan Murtaugh in Singapore at firstname.lastname@example.org To contact the editors responsible for this story: Ramsey Al-Rikabi at email@example.com Aaron Clark, Alpana Sarma
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- PetroChina, Beijing Firm Doubling LNG Storage in Caofeidian as Demand Rises (Nov 06)
- Iraq's Talks with Exxon on Southern Oilfields in Final Stages-Minister (Oct 09)
- Ecuador to Offer Oil Blocks Under New Bidding Terms in Jan (Oct 06)
Company: OPEC more info
- OPEC Points To Larger 2018 Oil Supply Deficit As Market Tightens (Nov 13)
- Total Primary Energy Demand to Increase by 35% (Nov 08)
- OPEC Fightback Sees US Stocks Crumble (Nov 07)
Company: CNOOC more info
- CNOOC 3Q Revenue Rises; Only Halfway To 2017 Spending Goal (Oct 25)
- CNOOC Completes Test Runs at Huizhou Refinery in Guangdong - Report (Oct 09)
- Exxon Mobil Bets on Brazil, Buys 10 Oil Blocks in Auction (Sep 28)