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China CNOOC exports first Australia-spec diesel cargo

[BEIJING] China National Offshore Oil Company (CNOOC) has exported a 35,000-tonne cargo of diesel meeting Australian specifications for the fuel, the first shipment of its kind, a statement by the state assets regulator showed on Wednesday.

The cargo left CNOOC's Huizhou refinery, in southern Guangdong province, on June 17 in a move "to seize the international high-end market of refined oil products", according to the statement.

The cargo meeting Australian specifications is the latest in a flood of Chinese exports to hit Asian markets. Australia requires its diesel to be of high quality, containing sulphur levels lower than that accepted by many other countries.

China's diesel exports rose more than four-fold in May from a year earlier to a record 1.48 million tonnes, customs data showed, reflecting a slowdown in China's heavy industry which typically uses diesel and continuing growth in throughput at independent refineries.

This slowdown has prompted Chinese refiners to seek buyers in international markets, where diesel has enjoyed a jump in profit margins, fuelled by strong demand especially in south and Southeast Asia.

Many of China's diesel exports are "headed for the Philippines and Bangladesh, two countries which are net short diesel and affected by drought which is driving demand for diesel for power generation", said Nevyn Nah, an oil products analyst with consultancy Energy Aspects.

He said "year-to-date, the top five receiving countries of Chinese diesel exports in descending order have been Singapore (26 per cent), Hong Kong (16 per cent), Philippines (15 per cent), Bangladesh (7 per cent) and Sri Lanka (6 per cent)".