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China's Unipec set to resume US crude oil imports 'very soon': executive

Chinese state-owned Unipec, the country's biggest importer of US crude, will resume imports from the US "very soon" and the volumes will likely be significant, a senior executive told S&P Global Platts.

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"[We] will resume imports from US very soon, and now we are in talks with relative [Chinese government] ministries about the matter," the executive, who declined to be named, said.

The executive did not provide details but said that once the purchases begin the volumes will likely be significant.

Unipec -- the trading arm of Sinopec, the world's biggest refiner by capacity and throughput -- is the state-owned enterprise (SOE) entrusted with implementing the government's side of the China-US trade deal to increase purchases of US crude.

When asked how Unipec plans to import more US crude by March 1, the end of the 90-day window that the countries have agreed upon, the senior executive said: "We have our own plan".

Although the 90-day trade war truce was announced by the Trump administration at the beginning of December, the Chinese government has yet to finalize the specifics with the respective SOEs in charge of different commodities.

This week, Chinese SOEs made their first sizable purchases of 500,000 mt of US soybeans since the government imposed a 25% tariff in July, according to traders. That was followed by reports citing the US Soybean Export Council that China had bought up to 2 million mt of US soybeans in recent days.

However, key US energy exports like crude and LNG have yet to see a surge in Chinese buying interest.

"China and US have met agreements on agriculture, energy and automobile [trade]. More details will be released," Gao Feng, a spokesman with China's ministry of commerce, said in a media briefing on Thursday.

Vice-premier Liu He got in touch with the US government on Tuesday to exchange ideas about the next round of trade talks, and the communication between the trade teams was smooth, Feng said.

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State-owned oil companies have started looking at their options and what crude cargoes and grades were available at different loading points in the US, a Shanghai-based trader with a US crude supplier said earlier this week.

"It is a challenge to import a big volume by March 1, as the three-month window is too short, while a normal trading cycle between the two countries is much longer," a Beijing-based crude oil trader said recently, citing risks of cargoes being stranded on the water.

It takes about 56 days for a vessel to travel from the US Gulf Coast, where most US export cargoes are loaded, to China. Moreover, Christmas, New Year and Chinese New Year holidays also fall in the 90-day period, which may cause more logistical delays.

The US-China voyage is shorter for cargoes from the US west coast, but availability is limited despite China importing Alaska North Slope grade occasionally. Another option is to purchase US crude shipments on their way to other Asian customers through swap deals.

Given the higher risk, Chinese buyers have indicated to the government that they need more assurances to ensure the cargoes they buy will not attract tariffs, or that they will be compensated for losses or given a wider window to complete deals.

China's customs data showed crude oil imports from US over January-September surged 155% year on year to 326,000 b/d, worth around $6.74 billion. The volume fell to zero in October amid rising trade tensions and threats of new tariffs.

--Oceana Zhou,

--Edited by Daniel Lalor,