China makes First Purchase of U.S Oil from Gulf Since End of Export Ban

Posted by PortVision

soft-oil-prices.jpegThe United States entered a new era of free oil trade after Congress voted in December, 2015, to overturn the ban on most overseas exports. China's Sinopec Corporation, the state-owned oil refiner, has purchased its first US crude oil, due to be shipped from a Gulf coast port in March. This purchase may signal new continuing trade between the two countries.

China is the world's second-largest buyer and refiner of crude oil and the world's largest energy consumer. Although this purchase will head to China, its trading group, Unipec, has leased oil storage tanks in St. Croix in the US Virgin Islands where future US oil exports may head. The tanks have a capacity of 10 million barrels and have been leased for ten years. As reported by Reuters, this Caribbean location will allow Sinopec to blend US shale oil with less expensive, heavy Latin American crude oil before shipment to plants in China.

A recent article in Bloomberg Business points out that the recent worldwide plunge in crude oil prices has allowed China to fill its emergency stockpiles. The country may start four additional strategic petroleum reserves in 2016 with the goal of stockpiling enough oil to assure 100 days worth of net imports by 2020. Last year, China had only 30 days of reserves.

Investopedia speculates that China's ability to limit or even decrease energy costs to its population will result in an increase in disposable income which will lead to more investment, business expansions and general economic growth.

The Globe and Mail reports that despite China's growing economic woes, the downturn in crude oil prices has proved too tempting to pass up. In February, Chinese companies booked tankers to take on 1.38 million barrels of crude daily from West Africa and the country also increased purchases from oil producers in the North Sea and Russia. In January alone, China shipped four vessels of North Sea oil; in comparison, the country shipped only nine in all of 2015.

December 2015 also hit a record as China's refineries boosted their production to meet a growing demand for gasoline for its growing number of automobile owners; China is the world's largest market for autos as well as naphtha (an oil derivative involved in the petrochemical industry).

All of this activity is good news for the shipping industry which has suffered some softening in demand due to the volatile economies around the world.  Oceaneering’s PortVision and TerminalSmart products support our petrochemical refining customers with vessel tracking and marine terminal management systems that help them navigate through the complexities of the liquid cargo supply chain.  These systems include comprehensive dock scheduling, berth management, activity logging, and KPI reporting.  You can learn more at

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Posted on Mar 15, 2016 6:07:00 AM

Topics: Blog, News, CrudeOil, AIS