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[KastelCo]

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China oil use is on fire!!!!!!!!!!!!!!!!!

RPT-UPDATE - China to get full Mideast crude volumes for May
Wednesday April 14, 7:50 pm ET

(Repeat of story first filed on Wednesday)
(Recasts with other Middle East suppliers)

By Mia Shanley

SINGAPORE, April 14 (Reuters) - China, the world's second-largest oil consumer, is set to get its full volumes of term crude for May from the Middle East to meet robust demand in a surging economy, industry sources said on Wednesday.

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State-run trader Sinochem Corp has been notified by Saudi Aramco that there will be no change to its full term crude volume for next month compared with April.

"We will have full contract May supply from Aramco, steady from April," a source at Sinochem said.

Sources close to Unipec and Zhuhai Zhenrong Corp, China's two other major state traders that lift term crude from Middle East OPEC suppliers, said they also expected full term volume for May as in April, although they had not been officially informed.

Asian market players had been expecting a small cut in supply to the region following OPEC's (News - Websites) move to curb supply from April 1, but top producer Saudi Arabia has already surprised refiners in Asia by raising export volumes for May from April.

"For Sinochem, they are getting moderate allocations from the Saudis, so they are not usually hit by the cuts. There will be no change in nominations," said another trade source, who added that term lifters in Japan and South Korea tended to be hit first by any cuts.

Despite mild cuts by some Middle Eastern OPEC producers to other Northeast Asian customers in April, refiners in China had not received a cut in supply for that month and were confident of receiving full volumes in May, sources said. "Unipec's volume from Aramco should be stable from April. They should take the regular volume," said a source in Singapore referring to the trading arm of Asia's top refiner, Sinopec.

Unipec also received full contract volume in April.

Sources close to state oil trader Zhuhai Zhenrong, China's sole import agent for term supplies of Iranian crude, said it would get full supplies from National Iranian Oil Co.

"Iran will first cut their spot volume, not their term," said a source familiar with the firm's intake.

Zhuhai Zhenrong lifts about six million to seven million barrels per month of crude oil each month from Iran.

"The final result will be positive. They have said orally that there will be no problem with supply," the source said, adding the firm received full term volumes in April.

CHINA ABSORBS

China's thirst for oil has been driven by scorching economic growth of 9.1 percent last year, along with declining domestic oil production, and Middle East suppliers are unfailingly delivering the barrels, sources said.

Saudi Arabia was the largest crude supplier to China in 2003, with sales of 15.18 million tonnes, or 312,000 barrels per day (bpd), as China's total crude imports hit a record 91.1 million tonnes, up 31.2 percent on a year earlier, customs data showed.

"Everything is about China. You send in thousands of barrels of crude and it just disappears," said a Singapore-based crude oil trader.

Chinese traders said based on past OPEC practices, the impact of tighter supply tended not to trickle down to China, which the International Energy Agency (IEA) predicted would account for almost a quarter of world oil demand growth.

In the first two months of 2004, Oman and Angola were China's top crude oil suppliers, followed closely by Saudi Arabia and Iran, customs data showed.

The Commerce Ministry said in March, China, which has a population of 1.3 billion, expected net crude imports to exceed 100 million tonnes this year.

The IEA last week revised its estimate of incremental Chinese oil demand in the first quarter by 180,000 bpd to a record 6.14 million bpd, an 18 percent rise from the same period last year.

PetroChina (HKSE:0857.HK - News), which has a term contract with Oman, a non-OPEC country, and Sinopec Corp (HKSE:0386.HK - News) together control the bulk of China's crude imports.