China’s New Oil Purchase Could Be to ‘Outcompete US in Its Own Backyard’
China’s New Oil Purchase Could Be to ‘Outcompete US in Its Own Backyard’ © Flickr/ Pieter van Marion
13:58 17.01.2016(updated 14:29 17.01.2016) Get short URL
China’s new oil purchases could signal plans to outcompete the United States in Latin America following the end of the US oil export ban, according to an industry insider.
The oil China purchases from the United States could be used to compete against the US in the Latin American market, according to the Executive Director of the North American Carbon Capture and Storage Association (NACCSA) lobbying group, Michael Moore.
A report from Reuters from Thursday, citing an anonymous source, said that Chinese purchases of oil could be shipped to the St. Croix refinery and then mixed with oil from Latin America for shipment to Chinese refineries. According to Moore, the purchases could be done to effectively outcompete the US on the Latin American market after the lifting of the US export ban.
“It’s quite possible that China is taking part in the fate of cheap American assets; holding black gold and buying very cheap American crude to compete against us in our own backyard,” Moore told RIA Novosti in comments translated into Russian.
Pricing differences led to the US WTI oil benchmark being priced below international equivalents. According to Reuters,
“It is highly unlikely that Sinopec would send this crude oil to China. It’s more likely to go to one of the Chinese oil refineries in Latin America, possibly in Venezuela. Shipping American oil to China is unprofitable because of the costs,” Moore told RIA Novosti in comments translated into Russian.
China recently leased storage space at the refinery in St. Croix, US Virgin Islands, which previously processed crude oil from Venezuela for consumers in the US. The refinery was shut down in 2012 as a result of decreased demand for foreign oil in the United States.
According to Moore, the plan could have also been made to create storage facilities around the world in case of instability in the Middle East.