China has suspended oil exports to Japan due to a stalemate in
sales negotiation, risking the future of a three-decade long oil
shipment programme.
The sales talks were on hold as China, the world's second
largest oil importer, demanded a price increase and a cut in
volumes to justify exports from its aging Daqing Oilfield,
industrial and company officials said.
Analysts said the economic relationship between the two
neighbouring countries is unlikely to be affected by the event as
the export is small.
"There has not been a reply to our price quote yet," said a
PetroChina official.
"We don't know whether we will continue the export this
year."
PetroChina, the owner of the Daqing field, represented the
Chinese government to?export the crude from Daqing, which is
China's largest oilfield.
The official refused to reveal the price quote PetroChina had
offered.
Earlier reports said China wanted to raise the premium for the
crude to US$6.30 a barrel over the average price of Indonesia's
Minas and Cinta crude from a premium of just 45 cents per barrel in
2003.
PetroChina also told Japan to cut Daqing supply in 2004 to
500,000 tons from 3 million tons in 2003 as the output of Daqing is
declining, the report quoted an unnamed Japanese trader as
saying.
"It won't be exported to Japan again based on long-term
contracts," the Japanese trader was cited as saying.
China started to export Daqing crude to Japan since 1978 under a
long-term government-to-government agreement to promote bilateral
trade.
In 2000, the two nations renewed a 5-year contract to export 3-4
million tons of Daqing crude in the first three year starting from
2001. Negotiation on the 2004-2005 contract term started last
year.
Export from Daqing now accounts for about 1.5 per cent of
Japan's crude imports.
???
An official from the Ministry of Commerce denied that talks between
the two governments have broken down. He added that PetroChina and
Japanese companies are holding "some loose contacts."
The PetroChina official indicated that the price hike is
understandable since China itself has to import a large amount of
oil.
China's oil imports have been surging in recent years as the
economy booms. The country imported nearly 100 million crude oil
last year, accounting for almost 40 percent of its consumption.
Analysts said the price hike also reflects the cost rise of
exporters after China introduced new tax policies this year to
remove a 13 percent rebate on crude export. The rebate cut is the
result of China's reform on its entire rebate system.
Experts said the production decline of Daqing also forced China
to reduce its crude export. Daqing, which represents one-third of
the nation's oil output, last year saw its production fall for the
first time in 27 years below the benchmark 50 million tons.
Daqing had planned to cut oil output this year by another 2
million tons from 2003 and output may drop to 30 million tons by
2010.
(Xinhua News Agency January 12, 2004)