Big three to fight `Asian premium' on Saudi oil sales
Karen Teo
China, Japan and South Korea are mounting a new combined challenge to the ``Asian premium'', long a scourge of regional oil-importing economies.
The term refers to the US$1-US$2 (HK$7.80-HK$15.60) per barrel premium Middle Eastern oil producers, particularly Saudi Arabia, automatically levy on sales to Asian customers.
The issue's urgency is growing for China, which imports two million barrels of crude per day - about 70 per cent from the Middle East. Bejing will have to increase that intake in order to sustain its rapid economic growth.
The surcharge of as much as US$2 per barrel could be adding as much as US$1 billion to China's annual energy bill. And with imports expected to grow by another 400,000 barrels per day next year, there is no end in sight.
Analysts say the Asian premium mainly reflects the fact that Asia is more dependent than Europe and North America on Middle Eastern oil.
But now China, Japan and Korea are together searching for ways to eliminate the premium through an ad hoc body known as the Committee on Northeast Asian Co-operative Initiative.
``The heavy amount we import is another leverage we can use to persuade the Middle East to see things our way,'' chairman Moon Chung In was quoted as saying in the Korea Herald this week.
The three countries may work out a deal to make joint purchases of crude oil, said Moon, although officials of Korea National Oil Corp, the country's state oil firm, said many details remained unresolved.
Though China has already overtaken Japan as the world's second largest oil consumer, China's position is somewhat more advantageous.
That is because it has been less conservative than Japan in purchasing crude and has made more headway in diversifying its import sources.
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