China Economy
China exceeds US to become Saudi Arabia's top oil customer Source: Global Times [16:47 February 23 2010] Comments By the end of 2009, the amount of the crude oil that China imported from Saudi Arabia exceeded 1 million barrels per day, while the US, the primary importer of the country's oil before, imported less than 1 million barrels per day for the first time since more than 20 years.
China's strong demand for oil is changing the structure of the global oil market, a China Business News report said Tuesday.
According to the figures from the General Administration of Customs of China, in 2009, the accumulative total amount of oil that China imported was 204 million tons, breaking 200 million tons for the first time.
Saudi Arabia became China's largest oil source by exporting 41.86 tons, making up about 20 percent of the oil imported by China.
"The rapid growth of the oil imports from Middle East countries like Saudi Arabia rings the bell of the countries high degree of dependence on foreign trade. To ensure the energy safety, China has to change its economic development model and improve the diversification of its energy sources," said Han Xiaoping, a China energy analyst.
Saudi Arabia has been one of the most important sources for US oil imports, but in 2009, the imports amount dropped dramatically, while China's imports amount grew 15.1 percent and replaced the US to become the largest customer for Saudi Arabia.
Saudi Arabia's change in the oil flow direction seems signal delicate changes in the global oil market, the China Business News report said.
"The US drop in oil imports from the Saudi Arabia does not necessarily mean its influence in the world's oil market is weakening," Han said. Han said that the US prices the world's oil through the dollar and this is more influential than direct purchase of the oil.
Han added that Saudi Arabia's increase in its exports to China means it is seeking a stable market for its large oil reserve and China's continuous growing demand is a good choice.
Figures from China customs also showed that China's oil imports exceeded 50 percent in 2009 and Saudi Arabia made up 20.5 percent of China's total oil imports.
The top three sources of oil for China are Saudi Arabia, Angola and Iran.
Han said that these figures revealed two problems in China's oil safety network. One is the increasing dependence on imported fuel with half of the oil imported. The other problem is the reliance on Iraq and Saudi Arabia in the politically volatile Middle East.
Since importing 6 percent of its oil in 1993, China took only 16 years to raise its dependence to 49 percent in 2008 and exceeded 50 percent in 2009.
According to a research report from the China National Petroleum Corporation (CNPC), from 2010 to 2015, China's economy will enter a new growth period, which will also demand for oil.
The CNPC report predicted that in the next five years, the country's oil demand will increase 4.9 percent on average and the demand in 2015 may reach about 530 million tons.
"China's high dependence on oil imports has high risks, large imports will consume large foreign reserves and the potential problems with energy safety will still exist. China needs to change the development model as soon as possible and raise the efficiency of its energy use," said Zhong Jian, chief economist of oilgas.com.cn.
"China needs to achieve a breakthrough in new energy as soon as possible," Zhong added.
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