The Strategist

Chinese oil giants set to create the world's largest oil buyer

06/30/2020 - 08:11

Chinese oil giants are in talks to create a group that could become the largest oil buyer in the world. At first, they intend to jointly acquire Russian and African oil.

Major Chinese oil refineries are in talks to create a group to jointly buy oil, sources familiar with the initiative told Bloomberg. According to them, negotiations are already at an advanced stage, and top managers are discussing details of the plan. 

These are PetroChina, China Petroleum & Chemical (Sinopec), Sinochem Group and China National Offshore Oil Corporation, Bloomberg points out. The idea was supported by the Chinese government and regulatory authorities, the agency’s sources said. The group represents oil companies that import more than 5 million barrels per day, which in theory makes it the largest buyer of oil in the world.

To begin with, the group intends to jointly submit applications for the purchase of Russian and African oil in the spot market, Bloomberg sources noted. According to them, the companies can submit a joint application for the purchase of Russian ESPO oil as early as next month. In the future, the group may expand and allow participation of non-state processing enterprises, including so-called teapots: Chinese independent refineries, the agency said.