China＇s Oil ＆ Gas Imports and Exports in 2011

VIANNEI PUI CINI IALChina's oil Gas Importsand Exports in 2011Tian Chunrong(Information Department, SinopecAverage oil price in international market exceeded imports of natural gas to domestic consumption rose to 21.2%10 Us dollars and hit historic high in 2011, but in 2011Chinas crude oil imports still rose to 273. 78 milliontons. Net imports of crude oil, refined oil, liquefied Crude oilpetroleum gas(LPG)and other oil products created Crude oil imports created a new historic high and reachedanother historic high. Oil dependency, i.e. the 253. 8 million tons in the whole year of 2011, about 14.5proportion of net oil imports to domestic consumption million tons more than in 2010 and rising by 6.0%. Stablewent on rising and rose to about 59.8% in 2011. and rapid growth of economy boosted surging domesticNet imports of refined oil rose by 46% remarkably, demand for oil products, and China's crude oil imports keptindicating that the growth of processing capacity of increasing for 10 years. Refining capacity expanded rapidlydomestic refineries lagged behind consumption of oil domestically. More than 40 million ty new refining capacityoductIn recent years, natural gas has been widely used was put into operation separately in 2009 and 2010.Andmore than 20 million t/y crude oil distillation capacity wasto substitute other kinds of gas in gas domains, so theconstructed and reconstructed in 2011(Fig. I and Fig. 2)import LPG market shrank further New refineriesIn 2011, processed crude oil of national refineries rose bywere put into operation and the existing refineries4.9% and reached 445.9 million tons. Demand for oil productsincreased processing volume, which enabled theand processing volume of refineries grew up increasingly,domestic LPG supply to rise increasingly and theeanwhile growth of domestic crude oil production got slowimport LPG market to get smaller. In 2011, LPGimports grew up slightly, but most of the growthOil spill accident occurred in Penglai Oilfield made the crudeion was transited to neighboring countries, so netpreby 6imports did not rise actually but dropped to2. 24 million tons instead50000100The national policy of adjusting energy345000Consumptionstructure and protecting ecologic environment a40000Net importsmade natural gas consumption rise rapidly35000In 2011, net gas imports rose to 30.7 billionDependence degreecubic meters, 89.0% higher than in 201030000Among this, pipeline natural gas imports from25000Turkmenistan saw a three-fold increase, risingfrom 3.5 billion to 14.1 billion cubic meters15000In Jiangsu and Liaoning Provinces two imports 10000liquefied natural gas(LNG)receiving facilitieswere built, which made LNG imports rise by6% and reach 16.6 billion cubic meters99719992001中国煤化士10Import natural gas dependence degree roseCNMHGrapidly, and the proportion of China's net&. I Oil import dependence degree m Chna24 CHINA OIL GAS万乃数据2012MARKET POTENTIALexporter to China, accounted for 1/5 of China's2800026000crude oil import market. The imports from Iran24000B Other oil productsgrew the fastest, which rose by 30.2% in 201120000H LPGas compared to that in 2010. Iran was thereby18000an exporter to China with the fastest growth1600014000■ Crude oilCrude oil imports from Europe and FormerSoviet Union as well as Western Hemisphererose by 20.7% and 12.8% respectively. Theproportion of high-sulfur crude oil imports4000from middle east to the total hit a new historic20000high of 43. 3%1997 1999 2001 2003 2005 2007 2009 2011 High oil price added to cost burdenFig 2 Variation in net oil imports in ChinaSoaring crud oil price added to cost burdenof refineries in 201 l and increased inflationCNPC and Sinopec offset the reduction reluctantly Crude pressure of domestic economy. Although the oil price didoil production only grew by 0.3% than last year, while not hit the historic high of 147 US dollars in summer ofthe average growth was 2.2% from 2001 to 2010, leading 2008, the average Brent oil price of 110.90 US dollarsto the great dependence of refineries on import. The in the year of 2011 was higher than the 98.53 US dollarsproportion of import crude oil to processing volume of in 2008. China was the second largest oil consumer onlyrefineries rose to 56.4%to 55.6%, which was only 24.7% after the U.S., of which the oil consumption took up about10 years ago1/3 of Asian-Pacific Region. As oil price rose by 10 USdollars per barrel, Chinas pay for crud oil import wouldSupply risk increasedncrease by 1.5 billion US dollars per monthIn 2011, crude oil accounted for 92.0% of net oil In 2011, China's crude oil imports and refined oilmports, 1% lower than in 2010, indicating that the imports rose by 45% and 16% separately, totaling 198.6increase of processed crude oil lagged behind demand billion US dollars. Soaring oil price led to the rise offor oil products because the increase of refining capacity domestic transportation cost and overall commodityslowed down and the gross profit was poor. In 2011, prices. This was one of the causes of sharpening inflationdependence on oil import reached 59.8%, doubling 10 that brought pressure to economic growth in 2011( Fig3years ago that was only 30. 3%. Supply security was and Table 1)worrying, which was shown by crude oil shortage. In The appreciation in RMB reduced the influence of2011, commotion was caused in some countries in Middle soaring oil price on China's demand for crude oil importEast and North Africa, threatening oil supply a lotto certain extent. Domestic refineries were trying toImport from Libya was suspended for sixyears, increasing Brent oil price and price4000r■LPG■ Diesel oilChina had to reduce crude oil imports from3000a Jet fuelfrica, and meanwhile to increase importNaphthfrom Middle east, Former Soviet Union andSouth America. Shortage of supply from Libra1500and hard-to-get crude oil from Africa made91000Chinas crude oil imports from Africa droppedby 15. 1%in 2011 and decreased to 60.15million tons. The imports from Middle Eastby 15.3% and increased to 130 million1000tons, which took up 51. 5% of total crude199719992001中国煤化工0g201I imports and was the highest in the pastCNMHG10 years. Saudi Arabia, the largest crude oil Fig 3 Net imports of Chinas refined oil and LPGCHINA OIL GAS(25中国煤化工CNMHG中国煤化工CNMHG中国煤化工CNMHG中国煤化工CNMHGof LPG imports from Middle East accountedfor 92% of China's total LPG imports. 68%/3500 Other countriesof the imports were used by Guangdong300目 TurkmenistanProvince. Some imported LPG to GuangdongM Russiaand Guangxi was transited to Vietnam, HongKong, Philippines, and other neighboringcountries and regions, LPG exports reached1. 17 million tons and rose by 27.6% in 2011Malaysia8100AustraliaNatural gas imports rose abruptly50Apparent demand for LGP rose by 4% inChina in 2011. LPG use in city gas market0820092010witnessed a declining trend since 2007According to the China Energy Statistical Fig 10 Sources of Chinas natural gas importYearbook 2011 published in December2011, LPG use for industrial raw materials and fuels from Qatar in late May 2011. As a result, Jiangsurose by 23% considerably in 2010, but residential users' Province became the fourth province importing LNGconsumption dropped by 3%after Guangdong, Fujian and Shanghai. In December,Natural gas consumption saw a continuous increasethe first LNG receiving station was put into operation inin different domains owing the adjustment of energyDalian, Liaoning Province, which made Chinas LNGconsumption structure and energy saving and efficiency import expand to 15.80 million tons(about 21.5 billionenhancement. In 2010, the growth of natural gas inubic meters) per year from 9.30 million tons at the endcivil and industrial domains reached 28% and 19%of 2010. The two newly built receivers and existing onesrespectively. The increasing trend of LPG and natural gasenabled LNG imports to rise to 16.6 billion cubiconsumption did not change in 2011 and was estimated 30.6% higher than in 2010. And the pipeline natural gasto maintain in the following 10 years. In 2011, domestic imports from Turkmenistan tripled, rising from 2010,snatural gas consumption rose by 6.9%, and net imports3.5 billion cubic meters to 14.1 billion cubic metersof natural gas including pipeline natural gas and liquefied LNG import mainly came from Australia, Indonesia, andnatural gas(LNG)rose by 1.24 times and reached 27.6 Malaysia; surging demand from domestic market enabledbillion cubic meters. Apparent consumption of naturathe receiving stations in Guangdong, Fujian, and Shanghairose by 20% as expected at the beginning of the yearto increase imports(Fig. 10)reached 130.9 billion cubic meters. Imported natural gas Prospectdependence degree rose to 21% from 2010s 11%(Fig9)Donggang received the first ship of LGN importedThe growth of China economy may decrease to 8.0%products may slow down, due to the adverseeffect of external economic environmenton domestic export processing industry,Net importsadjustment of energy structure, energy savingDependence degreeand emission reduction, and reform in refinedoil pricing mechanism. It is estimated thatthe growth in demand may decrease to 5%or ever lower. Steady substitution of natural是ttg fuels, civil gas andtransportation fuel market will exert influenceon the consumption of fuel oil, LPG and diesel00520072009moreYHE中国煤化工capacCNMHGFig9 Dependence degree of Chinas natural gas impor(to page 41)30 CHINA OIL&GAS万数据12MARKET POTENTIALtons of those fuels in 2012. Thatncrease is to partly come from anincrease in output from two blocks ain Brazil's Peregrino Oilfieldwhich is in the Campo Basin. Theblocks are expected to yield morethan 1 million tons of gas and oil ain 2011. Sinochem entered into thebusiness of exploring for oil andgas in 2002 and now operates 25blocks in 10 countries, includingBrazil, Colombia, Peru and the -United Arab Emirates. Thatbusiness now contributes 10 percentof Sinochem's profits, the officialsaid. The energy conglomeratemade 7.35 billion yuan(USS1 17billion)in net profit in 2010Sinochem deals primarily iThe Beijing-based energy conglomerate also expressedpetrochemicals distribution, but also in rubber, plastics, its willingness to take part in the second auction that willand agrochemicals. It operates through more than 100 be held for the rights to explore for shale gas in Chinasubsidiaries in China and abroad in concerns ranging an event that is being organized by the Ministry of Landfrom petroleum trading to real estate. Unlike China's and Resources. The auction will enable Sinochem tothree largest oil companies -China National Petroleum further test the commercial opportunities entailed inCorporation, China Petrochemical Corp and China the production of alternative fuel in China. SinochemNational Offshore Oil Corporation- Sinochem does not was not short listed to bid in the first shale gas auctionhave the licenses it needs to explore domestic oilfields Sinochem gained a 24.5 percent non-operating interestand has to expand overseas to maintain its growth. " Were in the Zhaodong oil block in Bohai Bay by purchasing alooking for acquisition opportunities in foreign markets, 100-percent stake in New XCL-China LLC in Februarybut were very cautious and careful about making final 2007. That marked the company's first and only foray intodecisions, " a Sinochem official saiddomestic oil exploration. G( from page 30)To achieve the goal of increasing the proportion ofis going to be put into operation and the reserve capacity natural gas to primary energy consumption structure fromof business and government will be expanded this year. 4% to 8% during the 12th Five-Year Plan period(2011And the market demand and supply will be regulated by 2015), natural gas consumption will continue to growimported resources, as the import tariff on refined oil rapidly. According to the 2011 Domestic and Internationalfurther declinesOil and Gas Industry Development Report released byInternational political situation is still unstable. Oil CNPC in the beginning of 2012, Chinas natural gasproduction declined in Syria, Yemen, and Sudan; domestic consumption will rise to 150 billion cubic meters, naturalsituation of Iraq, Nigeria and other oil producers in gas imports will exceed 40 billion cubic meters, and theMiddle East and North Africa was still unrest. New risk degree of dependence on natural gas import will reachin supply arises from the new measures against Iran's oil 30%. Domestic gas consumption will increase stablyindustry by Europe and U.S. Oil price may not exceed 120 Natural gas import will mainly come from pipeline gas,US dollars per barrel in long term due to the fragile global and the importuble to 30 billion cubic meterseconomic growth, but regional oil supply risk may lead from Turkmeni中国煤化工 PG receivingto soaring price. China should not only do well in dealing facility locatedCNMHGvince will bewith supply interruption caused by unexpected events, but completed and put into operation in 2012, and LNGalso prepare well for continuous high oil priceimports will grow remarkably. GCHINA OIL GASNo.1.2012