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Low oil prices drive up China's crude oil imports

(Xinhua)
Updated: 2016-08-01 08:52
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    China's crude oil imports hit a record high in the first half of 2016 despite an economic slowdown, and analysts largely attributed the surge to low prices, not strategic maneuvering.

    The country imported 186.5 million tonnes of crude oil in the first half of the year, 23.15 million tonnes more than the same period last year, although imports in June slowed to 30.62 million tonnes from a peak of 32 million tonnes per month in March, April and May.

    "Enterprises increased crude oil imports in the first half year as they believe global oil prices have bottomed out," said Zhu Fang, deputy head of the information and market department of China Petroleum and Chemical Industry Federation.

    The oil import jump was also strengthened by policy decisions, as China's top economic planner set a floor for domestic retail fuel prices in January, said Zhu.

    At the beginning of the year, the National Development and Reform Commission (NDRC) declared that domestic retail prices should not be cut if global oil prices fell below 40 US dollars a barrel.

    The NDRC said the move was to buffer the negative effects of volatile fluctuations in international oil prices. Previously, it set a ceiling that domestic retail fuel prices would not rise if international oil prices rose above 130 US dollars per barrel.

    China also approved more private firms to work in the oil refinery business, which also increased oil imports, said an industry insider at PetroChina, China's biggest oil producer.

    So far, 15 enterprises have gained approval on crude oil imports, with their aggregate quota exceeding 60 million tonnes, according to the NDRC.

    NDRC official Zhao Gongzheng echoed Zhu's opinion, saying that it was the market, including low oil prices, that was causing the growth of crude oil imports.

    Zhao dismissed foreign media claims that China was taking advantage of low oil prices to build up its strategic petroleum reserves (SPR).

    "China's SPR has limited influence, so far, on global oil prices in light of its reserve ability and capacity," said Zhao, adding that it is a long process for China to expand its SPR.

 

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