Page 6 - MEOG Week 12 2022

MEOG PIPELINES & TRANSPORT MEOG

Saudi Arabia once again

Beijing’s top oil supplier

SAUDI ARABIA IN a not altogether unexpected turn of events Lower down the pecking order in terms of
in light of the ongoing Ukraine - Russia conflict crude suppliers to China, Beijing was prepared to
and knock on effect on global oil markets, Saudi upset some in Washington late in 2021, when fig-
Arabia has again replaced Russia as China’s top ures were released showing that almost 260,000
crude oil supplier. tonnes of Iranian crude had been ordered.
In figures released to global markets by Chi- This arrived in Chinese ports in January of
na’s General Administration of Customs, Saudi this year; the first shipment in over a year from a
exporters were shown to have regained their pre- nation long targeted by US sanctions.
viously held top spot on China’s supply rankings In related news, some sources have now
after increased Russian exports towards the end revealed that Saudi talks with Beijing to start
of last year saw Moscow briefly unseat Riyadh accepting payments for crude in Chinese yuan
in December. rather than in US dollars have been ongoing for
Recent cuts in Chinese import quotas, borne some time.
primarily by independent refineries, as well as Behind the willingness to move away from
hard-hitting global sanctions across a world greenback sales of oil - a norm since 1974, fol-
united against the Russian invasion though have lowing an agreement at the time with the gov-
seen Russia’s oil exports to China plummet to ernment of former US president Richard Nixon

just 12.66mn tonnes, equivalent to just 1.57mn - is increased ill-feeling over US security com-
barrels per day (bpd), a full 9% down since the mitments in the Kingdom.
start of the year officials say. If eventually realised, the effects on both the
Over the same period year in 2021, that figure US and China would be huge, likely leading to
stood at 1.72 million bpd. other major economies including Japan, and
Yet, in spite of the decrease in total tonnage, leading European Union nations attempting the
the overall cost of Russian crude in the same time same.
frame increased by almost a third - up 31.4% to At present roughly 25% of all crude sales from
$7.46bn. Hardest hit was Russia’s ESPO crude, the Kingdom make their way to China, and with
largely a result of China’s teapot refineries facing this comes significant leveraging power on the
pressure from government authorities intent on part of the Chinese government.
responding to claims of tax evasion by smaller But whilst negotiations have been going on
operators from late last year. since the late 2010s, between Riyadh and Beijing,
Saudi numbers meanwhile came in at a little with around 80% of all crude oil transactions
over 14.6mn tonnes, 1.86mn bpd, imported by around the world using US dollars, analysts do
Beijing at a total cost of $8.74bn. not see any immediate danger that may affect the
China doesn’t look ready to completely aban- status quo; particularly in light of the fact that the
don Russia yet though. Saudi riyal is itself pegged to the dollar.
Reports in recent weeks have claimed that At stake for all concerned, however, is approx-
buyers in China are already working with Rus- imately $14trillion in annual global oil trade,
sian oil producer Surgutneftegaz to keep supplies a trade in which China is the world’s leading
flowing around Western led blockades, although importer, with a government ambitious to make
no reliable data to this end has yet been released. hay while all eyes are on events in Ukraine.™

P6 www. NEWSBASE .com Week 12 23•March•2022