Brazilian state oil company Petrobras aims for China’s teapots with oil cargoes shipped to storage for future demand
- Two cargoes of Lula, Buizos crude to arrive in June-July
- Oil to be stored at Qingdao storage tanks leased by Petrobras
Brazilian state oil company Petroleo Brasileiro SA is shipping crude during June and July for storage in China to more quickly respond to demand from the country’s independent refiners, two sources with knowledge of the matter said.
China is the world’s biggest oil importer driven partially by demand from its independent refiners, known as teapots, centred in the eastern province of Shandong. Petroleo Brasileiro, or Petrobras, is seeking markets for its rising crude output and hopes to expand market share in China, where Brazil was the fifth-largest supplier in the first quarter of 2019.
Storing the oil will enable Petrobras to sell smaller parcels of oil promptly to the teapots, which account for about a fifth of China’s crude import demand, and expand its customer base beyond state refiner China Petroleum and Chemical Corp, or Sinopec, the sources said.
“The idea for storage is to sell small parcels and to be more competitive in this market. The main thing is to have oil anytime,” one of the sources said, adding that this will allow Petrobras to react to prompt demand.
Petrobras signed an agreement with Qingdao Port International Co in December to lease storage tanks at its joint venture Qingdao Shihua Crude Oil Terminal Co that can hold about 2 million barrels of oil, according to the sources and media reports at the time.
To fill those tanks, Petrobras has chartered the very large crude carrier (VLCC) Maran Cleo which is scheduled to arrive at Qingdao in Shandong on June 24.
The VLCC contains 2 million barrels of Lula crude, part of which has been sold while the rest will go into storage, one of the sources said.