China’s Crude Oil Imports to Drive Tanker Market, Poten Says. 4 mill bbls a day!

By Dinakar Sethuraman

Feb. 22 (Bloomberg) -- China, the world’s second-largest energy consumer, may lead an increase in demand for tankers as its energy needs rise, Poten & Partners said in a report.

The country’s imports of crude oil in the spot market have increased fivefold over the past 10 years to the equivalent of more than 55 Very Large Crude Carriers, or VLCCs, last year from 11 in 2000, the U.S. energy consultant said.

“China’s growing reliance on seaborne crude oil imports will set the tone of the tanker market for the coming decade,” Poten said in a report to clients dated Feb. 19. “China’s expanding middle class, strategic stockpiling and complex refining capacity ensure that it will continue to be a large ship, crude oil story.”

China’s crude oil imports may reach an all-time high this year as an economic recovery spurs demand for fuels, data from China National Petroleum Corp. showed on Feb. 4. The Chinese economy, which expanded at the fastest pace in the fourth quarter since 2007, will grow four times faster than the U.S. in 2010, the United Nations said in December.

Chinese charterers accounted for about 30 percent of VLCC spot fixture activity this year, up from below 5 percent a decade earlier, Poten said.

The nation set a January record for crude oil imports, with net shipments at 17.1 million metric tons last month, or about 4 million barrels a day, according to data by the General Administration of Customs on Feb. 10. That’s the highest for any January and 33 percent more than a year earlier.



Arabian Gulf



China relied on imports for more than half its crude oil needs last year. Its oil demand may grow 4.7 percent in 2010 to 8.9 million barrels a day, according to the International Energy Agency, and if demand reaches expected levels of 11.5 million barrels a day by 2015, it could lead to significant increases in ton-mile demand, Poten said.

Assuming that these incremental volumes are sourced from the Arabian Gulf, it could create demand for an additional 80 VLCCs to meet Chinese demand by 2015, according to the report. The Arabian Gulf accounted for more than 70 percent of Chinese imports since 2005.

“These barrels are likely to be sourced from farther away, resulting in even higher ton-mile demand,” Poten said. China’s strengthened relationships with future suppliers may contribute to the development of new tanker trade routes particularly from Atlantic Basin suppliers such as Angola and Brazil.

Beijing’s security of supply concerns over increasing imports are prompting attempts to ensure that 40 percent of the country’s oil is imported on Chinese-owned ships by 2015, Poten said. Chinese charterers and shipowners currently control less than 10 percent of the VLCC fleet, it said.




--Editors: Jane Lee, Clyde Russell.



To contact the reporter on this story: Dinakar Sethuraman in Singapore at +65-6212-1590 or dinakar@bloomberg.net.



To contact the editor responsible for this story: Clyde Russell at +65-6311-2423 or crussell7@bloomberg.net