China overtakes the USA…

… in oil imports.

A Financial Times article has illustrated the shift in crude oil and energy dynamics caused by the shale oil phenomenon combined with China’s growing prosperity.

Quoting the energy Information Administration (EIA), the FT points out that China now imports more crude oil than the USA.   China now runs at 57% crude oil dependency, with this number growing steadily every year.   Meantime, America’s imports are shrinking, thanks to the growth of shale oil production combined with a waning inclination to drive.

From the China side, there is a double-edged sword at work.   Their increasing volumes are allowing them to secure improved payment terms, especially from smaller producers, but it puts China at the mercy of the global geo-political diplomacy saga.   Where the USA previously acted as the world’s policeman, partly because of its dependence on Middle Eastern crude oil, will China find itself forced to take that role?   China has already started deploying peace-keeping forces in various hot-spots, though that has usually been to protect other interests.

For the USA, a retreat from the world crude oil market gives it new freedoms.   America’s dealings with Venezuela and other troubled oil countries should get a little easier, given the threat of an oil embargo is reducing.

For the petcoke market, it opens new doors for some, but closes doors for others.   The more heavy oil that is introduced into American oil refineries, the more fuel coke will be produced.   But the more Eagle Ford and Bakken shale oil that starts to flow through oil refineries that produce anode grade coke, the less coke will be produced.   That’s because there is less CCR in the VRO, if you really wanted to know.   So anode grade petcoke production is set to fall in the USA.   Meantime, China’s increasing thirst for imported oil will start to impact the amount of anode grade coke available for its smelters as well.   China has several new cokers coming into the market, but precious little of that coke will be to anode grade quality.



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