Petrobras decided to facilitate oil purchases from the Lula field to the independent refineries of China, known as “Tea Teapoes”. With this, the State seeks to increase participation in the largest oil importer market in the world.
Petrobras leased offshore tanks in Qingdao, in the eastern province of Shandong, and delivered the first oil shipment to refineries on Wednesday, said Qingdao Port International in a statement. With local stock, Petrobras can sell smaller volumes to independent refineries, many of which are concentrated in Shandong.
Brazil’s oil exports to China have increased in recent years. The country competes with Iraq and Angola by the post of the third largest supplier of the Chinese market after Russia and Saudi Arabia. The sanctions of the United States to Iran and Venezuela and the production cuts of the Organization of Petroleum Exporting Countries and their allies open a window of opportunity to Brazil.
The storage of Shandong “will provide a larger platform for Brazilian oil and will stimulate sales,” said Anelise Lara, Petrobras Refining executive director, in the Qingdao port communiqué. According to her, the company seeks to offer more flexibility to Chinese oil importers.
China’s so-called tea Teapoes sued about one-third of the country’s oil imports last year. These refineries have led a leap in Brazil’s shipments in 2019. The purchases increased due to the high profits in the Brazilian crude oil refining, with low sulphur content, in diesel. The relatively higher cost of similar quality oil from other countries has led the teapoes to accelerate Brazil’s imports. Lula’s field oil leads Brazilian exports to China.
Behind the initiative of Petrobras are the demands of Chinese teapots and a global surplus that challenges oil producers, said Li Li, analyst of commodity Consulting ICIS-China. The U.S. trade war and sanctions for Iran and Venezuela give Brazil a good opportunity to expand its presence in China, the analyst said.
China’s Brazilian oil imports rose to a record of 4 million tons in February, with an average of 3.5 million tons per month this year. The volume compares to 2.6 million tons per month in 2018 and 1.9 million in 2017. Source: Bloomberg
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