What NAP Projects for China’s Oil Imports
In the previous part of this series, we looked at Navios Maritime Midstream Partners’ (NAP) views on oil consumption, ton-mile demand, US crude oil exports, and the impact on the crude tanker industry. In this article, we’ll focus on NAP’s views on China’s oil imports, oil demand, its orderbook, and the impact on the crude tanker industry. This analysis should help us assess the future of NAP as well as Euronav (EURN), DHT Holdings (DHT), Teekay Tankers (TNK), and Nordic American Tankers (NAT).
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China oil imports
China, the world’s second-largest consumer of oil, imports two-thirds of its oil requirements. Since January 2009, China’s oil imports have more than doubled with an 11% CAGR (compound annual growth rate). Chinese crude oil imports averaged 8.4 million barrels a day in 2017, an 11% increase from 2016. China became the largest importer of crude oil last year. Going forward, additional refinery openings are expected to add another 2.7 million barrels per day from 2018 to 2020.
On a per capital basis, US oil usage is 6.7x that of China. European oil usage is 3.1x that of China, whereas global oil usage is 1.5x. When China reaches the world’s per capita consumption level, the country is expected to require 261 VLCCs, assuming crude is imported by sea.
According to NAP, half of the increase in oil demand going into 2035 will come from China and India. Also, a significant portion of additional demand will come from the Middle East, which means less crude will be available for exports from the Middle East. The combination of reduced Middle East exports and higher expected exports from the Atlantic Basin should increase ton miles for VLCCs.
According to NAP, the net VLCC growth in 2017 was 5.3%, or 37 vessels. The forecasted 2018 VLCC growth is 25 VLCCs, or approximately 3.4%.