China-Australia relations: Beijing set to dominate refined oil exports in Asia-Pacific region, observers say
- ‘The reason we see China as the main potential import source is the country’s rapid increase in refinery capacity,’ analyst says
- Australia is set to close two of its last four refineries
Chinese exports of refined oil products to Australia rose from a few thousand tonnes before 2011 to nearly 300,000 tonnes at the end of last year, according to figures from China customs. And given the announced closure of two of Australia’s last four refineries, its reliance on imports is expected to continue on that trajectory.
“The reason we see China as the main potential import source is the country’s rapid increase in refinery capacity combined with a slower growth in domestic oil products demand in the long term,” said Julie Torgersrud, an oil markets analyst at Rystad Energy.
“New, high-complexity refinery capacity starting up in China puts increased pressure on competing refiners in the APAC region, who are suffering from lower margins and usually have older, less efficient operations,” she said.
“We expect a net decrease in refinery capacity of around 1.2 million bpd in this region in the next two years, compared to a net increase in China of 1.5 million bpd in the same period.”