China’s Sinopec is moving to diversify its crude oil supplies as conflict in the Middle East exposes the risks of depending heavily on the region.
The world’s largest refiner said it will increase sourcing from Brazil, Africa and other regions, while continuing relationships with producers including Saudi Arabia and the UAE. Sinopec is also exploring alternative export routes, including Saudi Arabia’s Red Sea port of Yanbu and UAE loading points outside the Gulf. Before the Iran conflict, Sinopec sourced nearly half its crude from the Middle East.
The company currently holds enough crude inventories for around 20 days of refining.
Sinopec’s industrial centre remains firmly in China, where it operates an enormous refining and petrochemical network producing fuels, ethylene, polyethylene and other chemicals. Internationally, however, Sinopec is also active in upstream oil and gas, trading, refining and selected petrochemical investments.
The strategy is therefore straightforward: keep the Chinese industrial machine supplied while reducing dependence on any single producing region or shipping route.
For Sinopec, diversification is becoming less about finding the cheapest barrel and more about making sure the barrel actually arrives.
Personal Remarks
Whether you like it or not, China seems to have at least one advantage over the EU: it actually has a coherent strategy.
The Sinopec logo, however, is disastrous. Marketing, on the other hand, does not appear to be China’s greatest strength.
Source
Reuters — Sinopec to boost oil imports from outside the Gulf