How dependent are Chinese refineries on Russian oil?

Informed sources told Reuters on Friday that the Chinese Ministry of Commerce recently met with representatives of about ten independent refineries to inquire about the amount of Russian crude oil that private refineries import and at what prices.

China is buying increasing quantities of Russian crude as Moscow directs its sales to Asian markets after the Western embargo and the ceiling on crude oil prices and refined petroleum products.

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Independent refineries in China import a large portion of Russian crude, taking advantage of the deep discounts at which Russia sells its oil to customers.

“The government wants to understand how much independent refineries can buy and what their actual appetite for such imports is,” a source familiar with the talks told Reuters in talks with private refiners.

Russia’s exports to China rose to an estimated 2.03 million bpd in January, up from 1.52 million bpd in December, according to Refinitiv Oil Research data.

China’s state giants, including PetroChina and CNOOC, have recently bought more Russian crude oil and could increase imports from Russia to meet demand for cheaper oil, according to an Energy Aspects note last week published by Bloomberg. . If China moves to fill its reserves, the amount of Russian oil could jump to 2.5 million barrels per day this year, Bloomberg notes.

After a brief hiatus around the time the EU embargo and G7 cap on Russian crude came into effect, China’s largest state-owned refiners have resumed purchases of Russia’s Urals crude at a price well below the $60 cap without breaching sanctions. Industry sources told Reuters earlier this week

State oil refining giants PetroChina and Sinopec have returned to the market for the Urals and are buying it at deep discounts via trading firms that handle payments to Russian oil exporters and arrange shipping and insurance services, according to Reuters sources.