Oman's crude exports to China soar by 17.7 percent
Oman's crude oil exports to China have continued to soar amid the economic giant’s rising demand for energy and its increasing reliance on Middle Eastern oil supplies.
The sultanate's oil exports to China jumped 17.7 percent to 100.9mn barrels in the first half of 2014 from a year ago. China accounted for 70 per cent of Oman's oil exports and 60 per cent of its total production during the period, latest statistics of the National Center for Statistics and Information (NCSI) showed.
Oman's total oil exports however decreased by 5.2 percent to 143.9mn barrels in the first six months of 2014, against 151.7mn barrels a year ago, while production increased by one percent to 170.8mn barrels.
China imported 77.6mn barrels of Oman’s oil in 2009, and this surged to 180.8mn barrels by 2013.
In September last year China became the largest net importer of crude oil in the world, surpassing the U.S., according to the U.S. Energy Information Administration (EIA). The rise in China's crude oil imports is driven by steady economic growth. EIA said that China has been diversifying the sources of its crude oil imports in recent years as a result of robust oil demand growth and recent geopolitical uncertainties in some countries.
Speaking recently to Muscat Daily, H E Salim al Aufi, undersecretary at the Ministry of Oil and Gas, said that Oman uses two different contracts to sell its crude. “There is a term contract with the ministry which is fixed at the beginning of the year, and we also sell Oman crude through the Dubai Mercantile Exchange (DME).”
He said, “Chinese buyers purchase from the DME according to their requirements. The ministry’s term contracts are also sold on the DME. China takes its agreed quota of the term contracts and buys the rest from DME, and we are quite comfortable with that because we need DME to flourish and we need more contracts to be executed through the exchange.”
H E Aufi said that Oman crude is traded on DME as a benchmark, while most other Middle Eastern crude have direct contracts. “The price of Oman crude is set by the market and known two months in advance.”
According to DME statistics, its flagship Oman crude oil futures contract posted an average daily volume trading growth of over 52 per cent with 9,143 lots per day in the first half of 2014, compared with 5,993 lots per day in the corresponding period last year.
DME Oman also broke the barrier of 1mn contracts traded in the first half of a year, for the first time since its launch, with over 1.13mn contracts traded on the exchange. Nearly 40 per cent of the oil that trades on DME is destined for Chinese buyers.
With crude exports to China continuing to rise, the sultanate’s exports to other traditional Asian buyers, such as Japan, South Korea, Taiwan, Singapore and Thailand, have declined sharply in the last two years.
In the first half of 2014, Oman's crude exports to Japan dropped by 25 per cent to 10mn barrels, while exports to Taiwan declined 22 per cent to 14.7mn barrels. Exports to Singapore and South Korea fell 69 per cent and 37 per cent, respectively.