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Oil Imports Slump in January

Crude oil imports fell 24 percent year-on-year to 7.8 million tons in January, the first fall in more than two years, according to analysts and sources from the General Administration of Customs on Thursday.

Industry analysts attributed the slump to hefty year-end stockpiles, high prices on the international market and factors that might hinder transportation.

Due to high production and import levels last year, China currently has stocks of more than 20 million tons of crude oil, according to industry sources.

"The country's oil refiners will be able to draw on the crude stock to support their operations for a period of time," said Zhang Jian, an oil industry analyst with the Beijing-based China Securities.

Zhang also said current resurging international crude oil prices might prompt domestic buyers to think twice before placing more orders.

"The international crude oil price stands at more than US$50 per barrel, which is expected to drop in a couple of months -- in March or April," said Zhang.

"But the price fall will be slight, and oil refiners should not expect too much," said an analyst from the Petroleum Economics & Technology Research Centre under PetroChina, the country's second largest refiner.

The PetroChina analyst said another factor leading to January's import decline is the presence of obstacles to transportation, particularly during a harsh winter.

But the monthly decrease in crude imports does not signal an overall trend of falling imports for the year, said industry experts.

The country's demand for crude oil this year is expected to remain strong, some 40 percent of which is expected to come from imports, they said.

"The country will need another 30-40 million tons of crude oil this year," said the PetroChina analyst.

China Securities' Zhang predicted that oil production would rise by more than 10 million tons to reach over 180 million tons.

China, the world's second largest oil consumer, last year used some 300 million tons of crude oil, with 123 million tons coming from imports, according to industry sources.

"Some offshore oilfields of China National Offshore Oil Corp (CNOOC) in the Bohai Sea and South China Sea are expected to become operational this year, which will greatly expand oil production capacity," said Zhang.

Oilfields in western China's Shaanxi Province and the Xinjiang Uygur Autonomous Region will also increase production, said analysts.

"Despite production growth, imports will obviously still play an important role in meeting demand," said Zhang.

The country imported as much as 10.3 million tons of crude oil in January 2004, and 12.1 million tons last December, according to the industry.

(China Daily February 25, 2005)

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