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China's record oil processing & global imports

In 2023, China's crude oil processing hit a record high, averaging 14.8 million barrels per day. This emergence is part of China's economic and refinery capacity expansion post-COVID-19. 

The country has significantly increased its refinery operations, outpacing other nations, to support its growing transportation needs and its booming petrochemical industry, which is vital for producing everyday items like plastics, packaging, and textiles, according to the U.S. Energy Information Administration ( EIA.)

Most of China's recent refinery additions are designed to support both fuel production and the petrochemical industry, enhancing the output of key petrochemical feedstocks such as naphtha and liquefied petroleum gases (LPG) like propane and butane. 

Naphtha, a light hydrocarbon, is crucial for blending with motor gasoline and is a primary feedstock for petrochemical production, particularly in Europe and Asia. LPG and ethane, also significant for petrochemicals, are used to create essential industrial chemicals.

The integration of refining and petrochemical operations in China provides flexibility, allowing these facilities to adapt production based on market demands. This adaptability is crucial as China's role in the global petrochemical market grows, driving domestic demand for naphtha and LPG.

Despite plans to expand refinery capacity, such as the delayed Yulong complex now expected in 2025, the petrochemical sector faces challenges. Petrochemical margins in Asia have been under pressure due to rapid expansion amid high inflation and slower economic growth, impacting demand.

This development in China's oil and petrochemical sectors reflects the country's strategic moves to meet its energy and industrial needs while navigating global market dynamics.

China's record oil processing & global imports
China's record oil processing & global imports

Where does China import its oil from?

China imports its oil from various countries, with Russia being its top crude oil supplier, followed by Saudi Arabia, Angola, Iraq, and Oman. 

In the first half of 2023, China sourced additional crude oil from Russia, Iran, Brazil, and the United States. 

Additionally, China saves billions of dollars through sanctioned oil imports, with seaborne imports mainly consisting of ESPO from Russia's Pacific port of Kozmino and Urals from the Baltic Sea.

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