Iraq to boost oil flow to China next year
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Iraq will more than double crude oil supplies to China next year to over 300,000 barrels per day, Iraq's oil minister said, as Chinese refineries boost output to new highs to feed strong recovery in demand.
Iraqi oil minister Hussain al-Shahristani told Reuters the supply target yesterday on the sidelines of an OPEC meeting in Luanda, capital of Angola.
China is the world's No. 2 oil consumer and has the fastest fuel demand growth among all countries this year.
Chinese imports from Iraq have already increased nearly threefold in the first 11 months of this year, which saw average daily imports at about 144,000 bpd, according to Chinese Customs data.
Chinese traders forecast the imports to leap next year.
The volume of 300,000 bpd, which has yet to be finalized, would be roughly 30 percent of the contract amount China has agreed to take from Saudi Arabia, the country's top supplier. It also comes closer to the 400,000-bpd supply expected to be renewed with Iran, China's No. 3 supplier after Angola.
The 300,000-bpd total would be roughly 14 percent of the total of 2.1 million bpd Iraq has targeted to export for 2010.
"Price is the key. It's cheaper than Saudi or Iranian crude," one trader with a Chinese state oil firm said.
The sharp rise was also due to output cuts by Saudi Arabia of the heavier grades that Chinese refiners see more economic to process.
"I wouldn't blame the Chinese refineries as they want to maximize the margins," said a Beijing-based marketing executive with a Middle Eastern supplier.
China's implied oil demand rose 18.7 percent in November over a year earlier, the fastest pace on record, due to a strong economic rebound.
Four Chinese firms are lifting Iraqi crude - state oil trader Unipec, Chinaoil, Sinochem and Zhenhua Oil, a little-known Beijing-based oil trader.
Iraq, exempted from supply cuts by the Organization of the Petroleum Exporting Countries, is working to boost its output to 12 million bpd in six to seven years from around 2.5 million bpd now.
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