Asia region is most dependent on Middle East crude oil, LNG supplies
Asia, the epicenter of growth for oil and gas demand globally, is the region most vulnerable to any disruption in supply from the Gulf in the event of further escalation in the war of words between Iran and the United States in Iraq.
A boy walks past an oil tanker train stationed at a railway station in Ghaziabad, on the outskirts of New Delhi, India, February 1, 2019. REUTERS/Anushree Fadnavis/Files
Most of Iraq’s crude oil exports from its southern Basra ports head to Asia, according to Refinitiv data. And an estimated 76% of the 17.3 million barrels per day (bpd) of crude and condensate that flowed through the Strait of Hormuz in 2018 went to Asia, according to the U.S. Energy Information Administration (EIA).
Asian refiners prefer to process Middle East crude grades as they are generally cheaper than oil from other regions due to relatively higher Sulfur levels. Middle East oils also tend to be heavier grades, allowing refiners to further process residue fuel into higher-value products to boost revenue.
The United States used to be a major importer of oil from the Middle East but its share has steadily declined in recent years on the back of its own shale oil boom.
In 2018, U.S. oil imports passing through the Strait of Hormuz stood at 1.4 million bpd of oil and condensate, accounting for about 18% of total U.S. crude and condensate imports and 7% of total U.S. petroleum liquids consumption, according to the U.S. government.
Here’s a breakdown of Middle East crude oil and liquefied natural gas (LNG) imports for each major Asian importing country.
China, the world’s largest crude oil importer, buys about 40% of its crude from the Middle East. While China’s imports are diversified, it is the largest Middle East oil buyer globally, at just over 4 million bpd.
The second-biggest Asian oil importer gets nearly 60% of its crude supplies from the Middle East. It is also the largest buyer of crude from Iraq, at just over 1 million bpd in 2019.
Japan has one of the highest proportions of Middle East oil in its imports at 88.5% for the first 11 months of 2019.
“Our policy is to keep a big stockpile so, even if the Middle East has a big disruption, as long as we have these reserves, we will be OK,” a senior official from Japan’s trade ministry told Reuters. “We have enough supplies to last 200 days.”
REST OF ASIA
Despite efforts to diversify purchases beyond the Middle East, South Korea, Singapore and Taiwan still need to import 70-75% of their crude from the Gulf.
In southeast Asia, nearly half of Indonesia’s oil imports come from the Middle East, while almost all of Vietnam’s crude imports to feed the country’s second refinery are from Kuwait.
Middle East crude accounted for 73% of Philippines’ imports in the first half of 2019, government data showed.
Top three destinations for LNG from Qatar - the world’s top exporter - are South Korea, India and Japan, but those most reliant on Qatari LNG are Bangladesh, Pakistan and India.
Reporting by Xu Muyu in Beijing, Jane Chung in Seoul, Aaron Sheldrick in Tokyo, Nidhi Verma in New Delhi, Wilda Asmarini in Jakarta, Khanh Vu in Hanoi, Enrico Dela Cruz in Manila and Shu Zhang, Jessica Jaganathan, Florence Tan and Gavin Maguire in Singapore; Editing by Kenneth Maxwell and David Evans
Editorial Comment: The Future of FLNG: Less is More?
Global LNG export capacity is expected to increase by 45% between 2017 and 2022, to more than 400 metric MMtpy, with 90% of the new capacity coming from sanctioned projects in the U.S. and Australia. By 2050, this capacity is anticipated to exceed 700 MMtpy. Regasification capacity is anticipated to increase even more sharply.
Executive Viewpoint: Back to production: Where we’re going, we don’t need pipelines
What if a cost-effective way existed to extract and distribute natural gas, regardless of proximity to pipeline, and bring those assets back to production? What if the industry went in a direction that did not need pipelines? For those looking to monetize unproductive natural gas assets or bring unproductive wells back to production, it would be revolutionary.
Regional Focus:Australia to boost LNG exports despite domestic gas shortage
Australia is planning further increases in LNG production and exports over the next decade, despite quickly depleting reserves and a looming supply shortage in the domestic market.
GasPro 2.0: A Webcast Symposium
Following on the heels of the highly successful GasPro 2.0 Webcast Symposium in October 2018, the second GasPro Webcast Symposium 2.0 will take place on October 24, 2019.
The 2019 web event will gather experts in the fields of LNG, gas processing, and gas transport/distribution to share their operations expertise, engineering and design solutions, and technology advances and trends with our audience.
Attendees will learn about technology and operational solutions and deployments in a number of areas: plant design and expansion, construction, NGL production, optimization, sulfur removal, marine operations and separation technology.
October 24, 2019 08:30 AM CDT