Crude oil imports fell for the first time in two decades, while natural gas imports jumped nearly 20 per cent

China's crude oil imports have risen for two decades since 2001, making it the world's largest importer second-largest consumer of crude oil. But in 2021, China's crude oil imports fell by 5.4%, while imports of natural gas rose by a record 19.9% year on year.

China's crude oil imports fell 5.4 percent to 512.98 million tons in 2021 543.9 million tons in 2020, according to data released by the General Administration of Customs on Jan 14. Reuters reported on the same day that China has been the main driver of global oil demand over the past decade, accounting for 44 percent of global import growth 2015 to 2019. Even in 2020, when the pandemic was deeply affecting, China's crude oil imports were up 7.3% the previous year, according to public data. The price of Brent crude fell slightly to $84.4 a barrel on the day of the customs bureau's data release.

The main reason for the drop in China's crude oil imports is a government crackdown on private refineries, the report said. According to Reuters news agency reported last year, the Chinese government to the private refineries review, the behavior of tax evasion non-standard transactions in the refinery can get import quota has been cut, the second batch of crude oil in June that year issued by import quotas, there are several private refineries didn't get any quota, some other refineries are already used up all the quota. April to November of that year, China's monthly crude oil imports fell year-on-year for eight consecutive months. Monthly crude imports did rise until December, by nearly 20 per cent, as refiners used up their remaining quotas.

In addition to regulating business practices, Reuters said the move is aimed at curbing domestic overproduction of fuel promoting transformation upgrading to reduce carbon emissions in a "dual carbon" environment. "This could mean the end of the period of rapid growth in China's crude oil imports as in the past," said one analyst.

In addition, crude oil prices also have an impact on import demand. Fuel demand also began to recover the impact of the pandemic in 2020, with oil prices at their lowest level in decades, the report noted. But in 2021, with fuel demand growth slowing oil prices rising into "backwardation" -- spot prices are higher than futures -- producers are reluctant to store oil.

"Rising crude oil prices, the market structure of 'backwardation' the government's overall strategy to cool speculation in commodity markets combined to drive the decline in China's crude oil imports last year," said analysts at Global energy consultancy FGE.

The drop in crude imports has naturally affected China's exports of refined oil products. China's annual exports of refined oil products fell 2.4 percent 2020 to 60.31 million tons, the first decline since 2015, according to the General Administration of Customs. But unlike petrol, diesel jet fuel, exports of low-sulphur fuel oil for ships rose slightly last year. China aims to become a regional bunker oil hub, Reuters said.

At the same time, China's imports of another energy source, natural gas, are soaring.

China's natural gas imports, including piped natural gas liquefied natural gas (LNG), rose 19.9 percent year-on-year to a record 121.6 million tons in 2021, compared with 5.3 percent growth last year.

China's heavy LNG purchases were the main driving force behind the surge in imports, especially in the first half of 2021, when China overtook Japan to become the world's largest LNG buyer, the report said.

According to the 2021 World China Energy Outlook released by China National Petroleum Corporation, the proportion of coal oil in China will gradually decrease in the future, while that of natural gas will continue to rise gradually stabilize after 2040, the proportion of secondary energy such as electricity, heat hydrogen will exceed 70% by 2060.

The report believes that China's oil consumption in the short medium term will continue to grow, the future will give more prominence to raw material attributes. Gas consumption will grow rapidly. China's oil gas consumption is expected to peak at 780 million tons 650 billion cubic meters in 2030 2040, respectively.

Experts believe that oil gas will remain the main energy source in the world until 2040, accounting for about 50% of primary energy. As a "stabilizer" to support large-scale utilization of renewable energy, natural gas should be optimized.

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Source: Guanchan.com

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