Islamabad July 30 2022: PetroChina International delivered its first gasoil cargo to Pakistan recently, signaling the company’s breakthrough in the South Asia product market, the company said on its WeChat account on late July 28.
Instead of China-origin, the gasoil cargo was supplied and delivered by its Middle East desk and Pakistan desk, respectively, PetroChina International said.
The company is the international trading arm of China’s state-owned oil and gas giant PetroChina.
The breakthrough comes after China’s suspension of oil product exports to Pakistan since late May, following the South Asian country’s imposition of a 10% regulatory duty on flows effective July 1 to shut the tax-free access created by a bilateral agreement in 2019.
Earlier, gasoline imports from China were exempted from any duties under Phase-II of the China Pakistan Free Trade Agreement.
“It also suggests PetroChina’s effort to develop the South Asia market by sourcing barrels outside of China when Beijing tightens oil product exports to ensure domestic supply and cut emissions,” said Sun Sijia, an analyst with Platts Analytics.
Moreover, this highlights a shift in the focus of Chinese state-run oil product trading desks’ business to international trades. However, they were initially built to fix outlets for Chinese oil products, trading sources said.
According to the information on the WeChat account, the cargo was shipped by the Denmark-flagged clean tanker Torm Philippines.
The vessel loaded 324,454 barrels of gasoil from the Jubail Refinery in Saudi Arabia on June 8 and was discharged at Fauji, Karachi in Pakistan on June 14, data from Kpler showed.
Beijing is keen to cut the outflow of oil products by issuing fewer export quotas to ensure domestic supplies and tackle global inflation while reducing emissions to meet the country’s net-zero targets.
So far this year, China’s three rounds of allocation have taken the total quota volume to 22.5 million mt for 2022, 40% lower than the 37.61 million mt awarded in the three batches of 2021, data from S&P Global Commodity Insights showed.
China used to be a key gasoline supplier to Pakistan, led by PetroChina, but gasoil flows were thin as it supplied only one 40,000-mt (298,000 barrels) gasoil cargo to the South Asian country in November 2021, China’s official data showed.
Pakistan was also the only destination that recorded steady growth among China’s top five gasoline recipients, with flows jumping 93.8% year on year to 1.56 million mt (64,000 b/d) over the first half of 2022 despite drying up of outflows in June. According to China’s official data, this made Pakistan the second-biggest destination for Chinese gasoline cargoes over the same period, behind the regional trading hub, Singapore.
