The UAE and its chief oil producer, ADNOC, have taken the hardest hit from a decline in Japanese oil purchases.
ADNOC takes a knock as Japanese oil imports decline
The UAE and its chief oil producer, the Abu Dhabi National Oil Company (ADNOC), have taken the hardest hit from a decline in Japanese oil purchases. In recent years, Japan has been the biggest buyer of ADNOC's crude, placing the UAE consistently among the top two oil exporters to Asia's biggest economy. But in September, Japan's oil imports from the country had dropped 28 per cent from a year earlier, by more than 278,000 barrels per day (bpd), Japanese government figures show. The decline was equal to 12 per cent of the Emirates' total September oil output of about 2.23 million bpd.
Robin Mills, a petroleum economist with Emirates National Oil Company in Dubai, said commercial developments, such as contract expiries, may have contributed to lower sales. "Recently you have had signals from the UAE that they prefer to hold the line on production, while some others have been increasing exports," Mr Mills added. Whatever the cause, ADNOC's sales to Japan have dropped considerably more steeply than that country's overall decline in oil imports, which stood at 19 per cent last month compared with the same period last year.
Exports of Iranian and Qatari crude to Japan have also fallen sharply, while Saudi exports have slightly increased. As a result, Saudi Aramco is now the top oil supplier to Japan. In September, Saudi crude accounted for 30 per cent of Japanese oil imports, up from 24 per cent in September last year. The UAE's share of Japan's foreign oil purchases shrank to 22 per cent from 25 per cent over the same period, falling to 720,222 bpd from 990,405 bpd. Mindful of the weak outlook for oil demand in developed economies, the UAE has recently courted the governments of emerging Asian economies looking to strengthen trade ties with the nations most likely to increase their imports of GCC crude.
In August, Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, visited China to foster strategic co-operation with Beijing, especially in the energy sector. Recent ADNOC awards of drilling contracts to Chinese and South Korean firms have given further signs of the Government's strategy to broaden trade ties in the Asia-Pacific region. But Japan remains the UAE's oldest trade partner in the region. Last week, the winners of Dh40 billion (US$10.89bn) of engineering, procurement and construction contracts for a major ADNOC gas development project included Japanese and Korean firms.
Japan's drop in oil imports has contributed to an expansion of the country's trade surplus last month to its highest level in 18 months, despite a nearly 31 per cent decline in exports. @Email:firstname.lastname@example.org