Kuwait will provide around 250,000 bpd to refineries in China
Chinese refiners have finalised annual crude oil supply deals for next year with OPEC producer Kuwait at volumes steady with this year, around 250,000 barrels per day, two trading executives told Reuters on Thursday.
The figure is equivalent to around 5 percent of crude oil imports by China, the world's largest buyer of the fuel after the United States.
"Kuwait didn't really push aggressively in China sales yet, because its oil production has been kept at about 3.1 million bpd," one executive with direct knowledge of the supply pact said.
In the absence of extra orders from European buyers, Kuwait has no plans to raise its crude production capacity of around 3.1 million to 3.2 million bpd in the short term, the chief of state-run Kuwait Petroleum Corp (KPC) has said.
China is Kuwait's No.3 client after South Korea and India, taking 8 percent of its production each year.
But as China adds refining capacity, particularly two major greenfield refineries with which Kuwait could formalise long-term supply, its crude purchases from the Gulf state are set to rise significantly around 2014/2015, said the trading executive, who declined to be named because he is not authorised to speak to media.
With Kuwait's domestic output not expected to rise dramatically until 2020, a big increase in supplies to China would mean cutting back on other Asian customers such as Japan, where demand for oil is declining.
The Chinese refineries Kuwait could tie up for long-term supplies are state-run Sinochem Group's 240,0000-bpd facility that is set to begin trial production next June, and a 300,000-bpd complex planned by Sinopec, Asia's largest refiner, in the southern province of Guangdong.
Petroleum and chemicals trader Sinochem, which has ambitions to become an integrated energy player, expects its first major refinery in the coastal city of Quanzhou to use crude mainly from the Middle East, including Kuwait, with which it agreed a 2007 deal to buy 240,000 bpd of crude.
In 2009, Sinopec signed a pact with KPC to jointly build a refinery and petrochemical complex in southern China, but has yet to decide whether to build the $9 billion refinery by itself or in a joint venture with KPC and Total.