China is the main destination for Petrobras crude oil exports

June 28, 2019

As part of the strategy to develop new markets and add value to the export of pre-salt oil, Petrobras inaugurated a crude oil tanking facility in Qingdao Port, in the Chinese province of Shandong. The choice of location is strategic: China accounts for 75 percent of the volume of crude oil the company exports, of which 38 percent is destined for independent refineries in Shandong and adjacent regions. Through this initiative, Petrobras seeks to solidify its presence in the promising Chinese market, in a further step in the journey to diversify and capilarize its oil sales.

The availability of tankage at the port of destination of exports makes Petrobras’ product more competitive in relation to regional oils, allowing the flexibilization of lot volumes, negotiation deadlines and payment terms. In dealing with reduced volumes and deadlines, it is possible to shorten the period required for early negotiation of shipments and to face lower requirements regarding the period of validity of the credit guarantee instruments. Thus the company increases the range of potential clients. At the Port of Qingdao, Petrobras has four leased tanks, with a total capacity of two million barrels of crude oil.

“The development of new markets for pre-salt oil is an essential condition for Petrobras, against a scenario of increased exports that indicates volumes above 800 thousand barrels per day for the coming years. The challenge is great, requiring a permanent commercial activity in the search for new markets and customers for Petrobras ‘oil, allowing the addition of value and an effective monetization of our reserves, “said Petrobras’ Executive Director of Refining and Natural Gas, Anelise Quintão Lara, at the first cargo ceremony in the tanks at Qingdao Port. In the first half of 2019, the company’s average crude oil export was 600,000 barrels per day.

About the Chinese market

By the end of 2014, only Chinese state-owned companies had permission to import oil. Independent private refineries, which account for about 25 percent of China’s refining plant and move three million barrels a day, were allowed to process only domestic oil. This group of independent refiners, made up of more than 50 medium and small refineries, is concentrated in northeast China, in Shandong province.

The scenario changed when a milestone occurred in the oil and gas industry in China: the Chinese government started in 2015 a program to break the state oil import monopoly and increase competition in the industry, gradually granting import quotas to refineries allowing these refineries also to have access to imported oils.

This opening has generated numerous commercial opportunities for producers such as Petrobras: currently 41 independent refineries are authorized to work with foreign oil, with a total import quota of more than 2.5 million barrels per day. In the effort to expand its operations in China, Petrobras has since the opening of the market consolidated a portfolio of 19 independent refiners for the sale oil chains from the pre-salt fields. With greater competitiveness in this market, the company intends to further increase its customer base and thereby capture the best value for its oils in the international market.

Source: Petrobras

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