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To: MMender who wrote (10406)	1/25/1999 1:23:00 PM
From: Charles A. King	Respond to of 13091

China seen facing record crude imports in 1999 04:35 a.m. Jan 25, 1999 Eastern By Chen Aizhu SINGAPORE, Jan 25 (Reuters) - China's crude oil imports are expected to bounce back to record levels in 1999 as continued growth in demand and falling domestic production take effect, Chinese official and industry sources said on Monday. A consensus view was that imports would be around 35 million tonnes, or 719,178 barrels per day (bpd). This would compare to the record import volume set in 1997 of 35.47 million tonnes and imports of 27.3 million tonnes in 1998. But indications from separate official media suggested imports could rise to 40 million tonnes plus. China has long expected its trade balance in crude to move in favour of greater imports as domestic production wanes and strong economic growth continues. China last year said it expected imports to rise to 40 million tonnes in 2000, industry sources said. It has embarked on building a portfolio of crude exploration acreage abroad, most noteably in central Asia and Iraq, to meet future demand growth. China reported that official crude production in 1998 fell for the first time in decades. Media reports said output declined to 159.46 million tonnes in 1998 compared with 160-162 in 1997. A further drop of three-to-five million tonnes is expected in 1999, as official media reported the four producers have set their production target at a combined 156.6 million tonnes. Official media reported crude consumption was expected in 1999 to reach 190 million tonnes. Other forecasts put expected consumption at a lower level of 184 million tonnes. Kang Wu of the East-West Center in Hawaii, a research group, said forecast 1998 consumption of 171 million tonnes in crude would grow four to five percent in 1999. Wu's forecast implied consumption at 179 million tonnes. Key to the import volumes will be China's policy towards exports. Exports in 1998 were 15.6 million tonnes, customs data showed last week. Industry sources said last week that China's exports could drop sharply in 1999 to just 7.5 million tonnes to help support domestic refineries and because of weak international prices. Industry sources said Chinese producers would be reluctant exporters while international crude prices languish around $12 a barrel. With taxation, Chinese producers can not compete with international markets. An early indication of a much tighter export programme came earlier on Monday when industry sources said Chinaoil was not planning to export any Daqing crude to Japan in February. The Japanese importers had asked to import 580,000 tonnes in February as part of a contract to import six to eight million tonnes during 1999. On balance, industry sources said the numbers imply that China will import around 35 million tonnes of crude in 1999, although official media reports indicated imports could be as high as 40 million tonnes off the back of a higher consumption forecast at 190 million tonnes. An official with the State Petroleum and Chemical Bureau (SPCB) under the State Council, responsible for mapping out industry policy as well as coordination between Sinopec and CNPC, took a more cautious view and expected exports to be higher than 7.5 million tonnes. ''We expect crude imports in 1999 to increase by around 4 million tonnes over the 1998 level,'' he said. His view indicated that imports would rise to just more than 31 million tonnes. The SPCB official said that the crude import growth was meant to promote greater refinery production while oil product imports, especially that of gas oil, are kept on a tight rein. China's gas oil import fell 57.9 percent to 3.1 million tonnes in 1998, customs figures showed. (1 tonne-7.5 barrels) --Singapore Newsroom (65)8703174; Fax(65)7768112 --Email:singapore.newsroom+reuters.com Copyright 1999 Reuters Limited. All rights reserved. Republication and redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. infoseek.go.com