[Keith_McClary]

Vietnam has condemned as illegal the operation of a Chinese deepwater drilling rig in what Vietnam says is its territorial water in the South China Sea and told China's state-run oil company to remove it. China said the rig was operating completely within its waters. China claims almost the entire oil- and gas-rich South China Sea, rejecting rival claims to parts of it from Vietnam ...

If Vietnam hadn't gone and won that war, it would have US military bases up the yin yang.

[toolpush]

Which war?
They won one in 1975, and they won one in 1979.
The second one was against the Chinese on their northern border. Some how I feel things may be different result today.

[Subjectivist]

Which war?
They won one in 1975, and they won one in 1979.
The second one was against the Chinese on their northern border. Some how I feel things may be different result today.

Indeed, China lost in 1979 because like the USA they lacked the pollitical will to do what was necessary to win. I don't think that would be the case today, China is much more self assured today than it was back then.

[ROCKMAN]

Actually for a long time I've felt our big mistake in the Nam was wagging war against the wrong side: we should have killed the French. LOL. But seriously we should have. If you study the long history of the country it's amazingly resilient. I suspect the move towards communism was as much too get away from the corrupt southern gov't as a desire for socialism. I have little doubt they would be a significant doubt power in Asia today if we had backed them.

[sparky]

.
It is quite common to describe the Vietnam war as a complete failure
well it certainly was very costly , very mismanaged and wrecked the US economy
but in 1962 when the war started to get some wood , the Communist countries were a reasonably solid block
by the time the helicopters were taking off the roof of the embassy
China and the Soviets were a drawn knives with each others
Thailand was safe (sort of ) and no red flag was going to be planted on Singapore

so yes , American generals were a pathetic bunch , American political strategy was a shamble
but time had been gained for the world to change

Even Vietnam , long treated like a leper country turned to be in the end to be reasonably friendly
they seems to be willing to let bygone be bygone with the US Navy welcome in Cam Ranh Bay

[ROCKMAN]

Just so no one misses the subtle misdirection: increasing "downstream investments" (refining) won't add 1 bbl of oil to the market place. Saudi Arabia produced on average 11.6 million bbl/d of total petroleum liquids in 2012. In addition to 9.8 million bbl/d of crude oil, Saudi Arabia produced 1.8 million bbl/d of natural gas liquids and other liquids. But that's what they produced. They also consumed 3 million bopd. So they are exporting 7 million bbls of crude oil per day. And the projection is: Saudi Aramco will have 8 to 10 million bpd of refining capacity". If I have the math correct this implies that the KSA will be exporting zero bbls of liquid hydrocarbons in the near future even if you count the NGL. Granted if the KSA will be sending that much refined product into the global market there should be less demand for crude oil. But in addition to having greater leverage over other economies by directly supplying their demand it also allows them to capture the refining profit. And then there's the obligations for preferential sales to its refinery JV partners...like China.

MANAMA, May 18 (Reuters) - Saudi Aramco, the state-owned firm of the world's largest oil exporter, said on Sunday its downstream investments would exceed $100 billion over the next decade, as global demand for oil rises by a quarter in the next 25 years. "Globally, these investments will exceed $100 billion over the next decade alone and that is premised on our belief in the long term sustainability of oil demand," Khalid al-Falih, the company's chief executive said at a petrochemicals conference in Bahrain. "As a result of both global demographic growth and rising standards of living in the developing world we see global demand for oil growing by a quarter over the next 25 years," he said. Falih said Aramco's refining capacity would be between 8 million to 10 million barrels a day (bpd) in the coming years, a figure exceeding the goal cited by Aramco in 2012 of 8 million bpd. "In the years to come Saudi Aramco will have 8 to 10 million bpd of participate refining capacity primarily in the high demand growth markets of the Far East and of course here at home in the Middle East that will make us one of the largest downstream players on the planet by volume," Falih said. According to the company's 2013 annual review, Aramco and its subsidiaries own or have equity interest in domestic and international refineries with a total worldwide refining capacity of 4.9 million bpd, of which its equity share is 2.6 million bpd, making it the world's sixth-largest refiner. Aramco is also looking to grow within the petrochemicals sector with two major projects. They have a joint venture with Dow Chemical Co to build the $20 billion Sadara petrochemical complex in Jubail that is due to come on stream in the second half of 2015 is also expanding its petrochemical complex called PetroRabigh that it jointly owns with Sumitomo Chemical. "That will take our total chemicals participate production capacity to more than 15 million tonnes per year," Falih said.

[Makes sense if the KSA sees their PO coming down the road. They would be driven to increase the value of their remaining oil reserves IMHO.]

[ROCKMAN]

An trusting twist: Even if Iraq wins a judgment against Israel can you imagine them paying? And what are the Arab oil producers going to do...boycott Israel? They already do. And about 25% of the products from the big Haifa refinery that are shipped to other countries in the Med Basin? Since oil loses its origin once refined are all the countries importing any Israel products going to stop importing all they had been? So now it looks like Israel may be developing a regional ally...the future country of Kurdistan. And perhaps another...Turkey which will get paid to transship Kurd oil to Israel.

Reuter – Iraqi Kurdistan looked set to unload in Israel a first cargo of disputed crude oil from its new pipeline after weeks of seeking an outlet as Iraq's central government has threatened legal action against any buyer. The SCF Altai tanker was anchored near Israel's Ashkelon port early on Friday morning. Securing the first sale of oil from its independent pipeline to the Turkish port of Ceyhan is crucial for the Kurdish Regional Government as it seeks greater financial independence from war-torn Iraq. But the new export route to Turkey, built to bypass Baghdad's federal pipeline system.The United States, Israel's closest ally, does not support independent oil sales by the Kurdish region and has warned possible buyers against accepting the cargoes. Israeli leaders have been alarmed in recent months, however, by signs of a possible rapprochement between Washington and Iran. Officials said Israel was keen to build good ties with the Kurds, hoping to expand its limited diplomatic network in the Middle East and broaden options for energy supplies. It was not clear whether the crude in the SCF Altai has been sold to a local refiner or was slated to discharge into storage, potentially for another destination. "We do not comment on the origin of crude oil being imported by the private refineries in Israel," an Israeli energy ministry spokeswoman said. The first tanker to carry Kurdish pipeline oil is still homeless after loading in May. After a false start sailing to the United States, the United Leadership tanker turned back towards Morocco, where it is anchored after local authorities refused to let it discharge for the Mohammedia refinery. The SCF Altai did not arrive directly from Ceyhan. The United Emblem was the second tanker to load crude at Ceyhan from the KRG pipeline at the start of last week. It then made a ship-to-ship transfer near Malta to the SCF Altai during June 14-16, local shipping and market sources said and ship tracking showed. Israeli refineries have taken Kurdish crude oil before but in small volumes, which were shipped to Turkish ports by truck. Some oil has also been stored there. The KRG began exporting a small volume of its Taq Taq crude grade by truck to Turkey in early 2013 and then added another grade Shaikan at the start of this year. Israel has less to lose than other U.S. or European refiners, because it has no contract for Iraqi oil. Iraq participates in the boycott of Israel along with many other Arab states. Italy has warned traders and refineries about the legal risks of importing the oil. Large companies with oilfield interests in southern Iraq have stayed clear, although a joint refining venture by Rosneft and BP used a cargo of trucked oil in May. The KRG's pipeline is currently pumping around 120,000 barrels per day to Ceyhan. The region's natural resources minister is aiming to export 400,000 bpd by year-end. Emboldened by its takeover of the major Kirkuk oilfield in northern Iraq, the KRG is also openly talking about the potential of exporting this oil through its pipeline as well after Kirkuk's usual pipeline outlet was sabotaged.

So the oil importers in the region, losing other Iraq oil if the ISIS adventure expands will refuse Kurd oil and Israel refined products?

[ROCKMAN]

Everyone condemns Chinese aggression regarding fossil fuels. And what changes?

Reuters - China has sent four more oil rigs into the South China Sea in a sign that Beijing is stepping up its exploration for oil and gas in the tense region, less than two months after it positioned a giant drilling platform in waters claimed by Vietnam. Coordinates posted on the website of China's Maritime Safety Administration showed the Nanhai number 2 and 5 rigs had been deployed roughly between China's southern Guangdong province and the Pratas Islands, which are occupied by Taiwan. The Nanhai 4 rig was towed to waters close to the Chinese coast. Earlier this week, the maritime body gave coordinates for a fourth rig, the Nanhai 9, which would be positioned just outside Vietnam's exclusive economic zone by Friday. Wang Ching-hsiu, deputy director of Taiwan's Land Administration Department, said Taipei claimed an exclusive economic zone around the Pratas Islands, but declined to comment on the rig deployments. China, which regards Taiwan as a renegade province and claims about 90 percent of the South China Sea, said the rigs were in waters close to Guangdong province and Hainan island. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have claims to parts of the sea. "For these normal activities there is no need for over-reading or to make any particular links," Chinese Foreign Ministry spokeswoman Hua Chunying told a daily briefing in Beijing. "Please don't worry, there won't be any problem." All four rigs are listed as being operated by China Oilfield Services Ltd. The Global Times, a popular tabloid published by the Communist Party's official People's Daily, quoted Zhuang Guotu, as calling the rig deployment a "strategic move". "The increase in oil rigs will inevitably jab a sensitive nerve for Vietnam and the Philippines," Zhuang said.

As the Chinese advise there is no problem: just stay out of our way, let us do what we want and there will be no problems. So far the rest of the world appears to be taking their "advice".

[ROCKMAN]

Another reason the Kurdistan/Israel oil link makes even more sense: for the moment Kurdistan can make good use of the 25% of Israel refined products currently being exported to other Med consumers:

Kurdistan is also expanding its oil refining capacity. It currently has two refineries. Current Iraqi refining capacity is estimated at over 900,000 bpd, but estimates vary because effective capacity has often fallen below nameplate capacity. However, Iraq’s refinery output is widely understood to be imbalanced: the country’s facilities produce too much heavy fuel oil relative to domestic needs and not enough other refined products such as gasoline. It is for this reason - in addition to that of strategic control - that the Kurdish Regional Government (KRG) has had to embark on a program to develop the region’s refining sector.

So folks might want to punish Israel for buying Kurd oil? Go ahead...give it your best shot. LOL.

[Keith_McClary]

Iraq lays claim to Kurdish crude cargo in Texas court
Iraq, in its filing in U.S. District Court for the Southern District of Texas, asked for an order allowing the cargo to be seized by the U.S. Marshals Service.

Sale of Kurdish crude oil to a U.S. refinery would infuriate Baghdad, which sees such deals as smuggling.

The U.S. State Department has expressed fears that independent oil sales from Kurdistan could contribute to the breakup of Iraq, said the oil belongs to all Iraqis, and warned potential buyers of legal risks.

But it has also made clear it will not intervene in a commercial transaction.

The US did intervene to block exports from eastern Libya.

[Keith_McClary]

UN threatens sanctions on anyone trading oil with ISIS terrorists

Russia submitted a draft statement to the Security Council on Monday night that would ban crude oil sales by terrorist organizations in Syria and Iraq, and potentially sanction anyone that does business with them. The measure “strongly condemns any engagement in direct or indirect trade of oil from Syria involving terrorist groups, and reiterates that such engagement constitutes financial support for entities designated by the Security Council 1267/1989 Committee as terrorist."

The statement also calls on all member states to take “necessary measures” to stop “nationals, entities and individuals” from engaging in transactions linked to non-state actors in the oil industry in Syria.

The Russia-backed statement will be discussed in the coming days at the Security Council. If it is adopted it will be less binding than a resolution, but will still send out a strong message to those trading oil with the Islamic State of Iraq and Syria (ISIS) and the al-Nusra Front in Syria and Iraq.

[ROCKMAN]

And now switching the discussion to selling oil to folks who aren't terrorists. Interesting gobblelyguke speak from the White House: the Commerce Dept didn't "corridinate" with the administration (the administration that appointed the head of the Commerce Dept) but none the less did follow the current standards for exporting liquid hydrocarbons. And emphasized the administration hasn't changed it's policy on such matters...whatever that means exactly.

Reuters - The U.S. Commerce Department's decision to give two companies permission last month to export lightly processed crude oil was not coordinated with the White House, a top adviser to President Barack Obama told reporters. "Those were decisions made at the Commerce Department, and were not coordinated with the White House, to my knowledge," said John Podesta, counselor to the president. "The Commerce licenses were in the regular order of applying their current standards to two license applications," Podesta said, replying to a question on Monday on a call about unrelated White House climate initiatives. Podesta, who oversees climate change and energy policy, emphasized that the Obama administration has not changed its policy on crude oil exports.

And along those lines: Reuters - Crude oil shipments out of the Texas Port of Corpus Christi climbed to a record high in June as the Eagle Ford shale play pumped out ever more crude. More than 560,000 barrels per day (bpd) of crude oil left the port, an increase of 61 percent from June 2013 and a rise of 5 percent from May's 535,000 bpd, which was the previous record high. Eagle Ford's gushing shale fields have yielded copious amounts of crude oil largely destined for refineries along the Gulf and East coasts, with some barrels going to Canadian refineries. The port data does not identify individual shipments or provide figures on shipments by destination. Energy companies and traders such as Valero Energy Corp and Trafigura Beheer BV are scrambling to take advantage of the shale boom, leasing docking space at the port and expanding existing facilities for transloading and storing crude.

FYI while the port data doesn't identify the destinations of those loads of oil it doesn't mean they don't know where every bbl is ending up. No merchant vessels leaves any US port without a detailed and certified manifest, including destination of the cargo, being filed with the US gov't. It's almost as if the gov't doesn't want the public to know how much oil is actually being exported. Which puts them in a silly position IMHO since the DC politicians created the phony and irrelevant issue of oil exports in the first place. As pointed out numerous times the American consumer doesn't compete for oil in the global market place. But they do compete directly with foreign buyers for products refined from oil...products which are fully legal to export. Exports of refined products that are equal to 6X the amount of oil shipped out of Corpus regardless of it's destination.

[ROCKMAN]

An update on controlling a bit of those "worthless" Canadian oil sands:

Reuters - State oil giant PetroChina plans to pay the more than $1 billion it needs to complete a takeover of the Dover oil sands project from Canadian firm Athabasca Oil Corp by the end of September, a person with knowledge of the deal told Reuters. PetroChina was supposed to complete the acquisition of Athabasca Oil's 40 percent stake in the project in June, but delayed the payment while it reassessed the deal amid a government-led corruption probe into the Chinese national oil company, the person said. The internal review showed the geological structure of the project is more complicated than previous estimates, which would increase development costs, but the acquisition will go ahead, the person added. "The next step is to complete the transaction," said the source, who declined to be named as he was not authorised to speak to the media. "PetroChina will pay in August or September." Asked about the deal, PetroChina spokesman Mao Zefeng said: "At the moment, there is not any sign that PetroChina will not proceed with the project." He declined to comment further. Officials at Calgary-based Athabasca Oil declined to comment on the payment.

Shares in Athabasca Oil tumbled last week after it said it was still trying to collect the C$1.23 billion payment owed to it by a unit of PetroChina, Phoenix Energy Holdings Ltd, for the stake in the Dover project. The delay triggered speculation that the deal may have been scrapped as the Chinese government investigates about a dozen former senior executives at PetroChina and its parent China National Petroleum Corp for alleged graft, including Beijing-based Song Yiwu, deputy head of CNPC's overseas operations. Song was deeply involved in PetroChina's Canada businesses. PetroChina, the world's fourth most valuable oil company, in 2009 signed an agreement to acquire 60 percent stake in the Dover and MacKay River projects owned by Athabasca Oil for C$1.9 billion in a major push into Canada's reserve-rich but capital intensive oil sands industry. Under the agreement, Athabasca Oil holds the option to sell its remaining 40 percent stake in the two projects to PetroChina after receiving relevant Canadian regulatory approvals. PetroChina bought the remaining 40 percent stake in MacKay River in 2012 for C$680 million. PetroChina and Athabasca are now negotiating the final sum for the remaining 40 percent stake in Dover, the person said, adding that the amount should be little changed from the C$1.23 billion previously agreed upon. The Dover oil sands project, 95 kilometers (59 miles) northwest of Fort McMurray, Alberta, is expected to eventually produce as much as 250,000 barrels of bitumen per day, according to filings by Athabasca.

(

[StarvingLion]

"... after receiving relevant Canadian regulatory approvals."

The collective 85 IQ of the oil industry is reading their free market books as we speak.

The lackey named Harper is right on top of it as soon as his rocker buddies quit the jam session for the night.

The rest of the Alberta masses at the circuses and dog walking parks are watching closely.

Don't worry, nobody cares.

[Keith_McClary]

Canada's open slamming of China for the NRC cyber attack has snowballed into open spat between the two sides. China, in its latest rejoinder, charged Canada of hurling baseless allegations on it, reports Globe and Mail. In a statement, China's foreign ministry rebuked Canada for making "irresponsible accusations that lacked credible evidence" in the matter of Chinese hackers having attacked the National Research Council's (NRC) vital computer networks.
...
Oil Diplomacy

The strain in ties comes in contrast to the warm vibes that Stephen Harper had displayed to China. In 2012 soon after U.S. President Barack Obama hinted to Mr Harper that there would be delay in the Keystone XL pipeline meant to carry huge volumes of Canadian crude to American markets, Mr Harper reached out to China with a Plan B to sell the crude to them.

The Canadian PM mooted the plan of a pipeline from Alberta to the Pacific Coast from where it could be shipped in tankers to China.
http://au.ibtimes.com/articles/561637/2 ... -GfAt_LIvQ

Chinese cyber spies disappointed by Canada’s complete lack of scientific research

BEIJING - Chinese state-sponsored hackers were disappointed after hacking into Canadian government and business research archives and discovering they contained little to no valuable information.

“Wow, how on Earth is this country more developed than we are?” said Chinese Ministry of State Security intelligence analyst Lao Xi Ming from the smoke filled computer lab where he harvests technological secrets.

Ming said he was “expecting so much more” when he hacked into the Canadian government’s schematics for ship and airplane designs, describing what he found there as “profoundly obsolete, and occasionally baffling.”

“This one folder,” he said, “contained only a crude drawing of an F-35 that was clearly made in MSpaint.”

“After a little digging we were able to find their budget numbers. It was less than our department spends on bribes in a month!” said Ming, shaking his head.

“We really wanted to steal Canada’s research into rehabilitating polluted lakes and rivers” said Ming. “But it’s all been deleted, and the only search results that came up for those keywords were an mp3 of the Arrogant Worms hit single Pirate on the River Saskatchewan, the Prime Minister’s grocery list, and an old episode of Captain Planet.”

According to sources, the Chinese were able to crack Canada’s national research database when the hackers correctly guessed the password as “NickelBack4Lyfe”.

[ROCKMAN]

Lots of theoretical offerings about how the various conflicts in the ME might affect the control of oil flowing in the region. Here’s a real example from more than a half century ago:

Reuters - News this week that U.S. crude oil exports had surged in June to reach the highest since 1957 raised a question not often asked: Why did U.S. exports suddenly surge, then just as quickly drop, nearly six decades ago? In March 1957, the United States exported a record 455,000 bpd of crude, up from just 40,000 bpd in the same month a year earlier, data from the U.S. Energy Information Administration showed. A year later, exports were back to just 27,000 bpd. The abrupt rise and fall in the 1950s was the result of political turmoil in the Middle East. In July 1956, Egyptian President Gamal Abdel Nasser nationalized the Suez Canal, the waterway constructed some 90 years earlier connecting the Mediterranean Sea to the Red Sea. The 101-mile seaway was a crucial link between big oil producers and European refiners, ferrying some 1.2 million bpd to Western Europe, particularly to Britain and France.

The move was seen as punishment for the United States and Britain withdrawing funding for the Aswan High Dam, but it also stung European nations who were losing sway over former colonies and led to a global struggle known as the Suez Crisis. Israel, France and Britain moved troops into the region to assert their control, bringing commercial oil flows through the canal to a halt -- with dire consequences for Europe. Alternative routes were far too long to compensate. Amid pressure from Washington and growing economic strain, oil-starved nations in Europe removed their troops from territory and the United States started pushing crude oil across the Atlantic. By November 1956, oil exports jumped to 285,000 bpd from 47,000 bpd a month prior, according to the EIA data. The Canal reopened in April 1957, allowing Europe to resume direct shipments and bringing a quick halt to U.S. exports.

The current rise in exports has been more measured and is likely to be much longer-lasting. Shipments from U.S. shores in June rose to 389,000 bpd, a 35 percent increase from May, with most of that oil going to Canada. But while the exports have recently reached modern-day highs, they are still a much smaller fraction of U.S. supply. In 1957, the U.S. consumed some 8.8 million bpd of crude, according to EIA data. Today, it consumes over twice that.

{But it goods to remember that the amount of US oil exported to the world is small compared to the approximate 45 BILLION gallons/year of refined products we currently ship to other countries. Much of those exports are diesel to S America and the EU. Thus the US is already significantly supplementing energy resources for many countries.}

[Keith_McClary]

CNPC-sponsored Crude Project Operates in Iraq

China National Petroleum Corporation (CNPC) has announced the completion of an oil pipeline in Iraq, the first crude export project of the country's postwar reconstruction to be completed.

The pipeline in Iraq's Maysan province will connect the Halfaya and Burzugan oil fields in south Iraq to Fao, a port near the Persian Gulf.

It stretches 272 kilometers and has an annual transportation capacity of 50 million metric tons.

Completion of the pipeline comes as a new round of sectarian violence in the country's north threatens the sovereignty and security of Iraq.

An official with CNPC calls the pipeline the province's "life line" for oil exports, saying it can enhance the productivity of the two oil fields it serves, aiding investment by Chinese enterprises.

[ROCKMAN]

In retrospect I suppose I should have included NG in the title of this thread. If folks thought the Israelis were a bit overly zealous before watch what happens now that Hamas is threatening $trillions in future revenue for Israel:

Reuters - The Palestinian militant group Hamas said it fired two rockets at an Israeli gas installation about 19 miles off the coast of Gaza on Wednesday in the first apparent attack of its kind. The Israeli military said no missiles had struck any gas platforms at sea. The armed wing of Hamas, engaged in a six-week war with Israel, said on its website it had fired two rockets at Noa, a gas well owned by Noble Energy and Delek. Noa lies northwest of the Gaza Strip in Yam Tethys, a largely depleted gas field. "The gas is flowing, business as usual," a spokeswoman for Noble said in an emailed statement. Delek had no immediate comment.

[ROCKMAN]

Not sure of the real implications of this latest move but it may be one more indication that PO will have a de-unionizing effect on the EU:

Reuters - Lithuania's President Dalia Grybauskaite sacked her ethnic Polish energy minister on Tuesday in a row that could affect talks with Poland over the future of the Baltic state's only oil refinery. The minister, Jaroslav Neverovic, was fired after reinstating his deputy, another ethnic Pole, who had been removed as part of a government reshuffle. The departure of the two politicians from the Polish Electoral Action party raises the possibility it might quit the centre-left coalition. The government would still have a majority in parliament, but such a move could cloud Lithuania's cooperation with its much bigger neighbour, Poland. Poles account for more than 6 percent of the Baltic state's population of 3 million, and Warsaw has previously criticized Vilnius for the treatment of its biggest minority.

Lithuanian refinery Orlen Lietuva is owned by Polish oil group PKN Orlen, which has said it wants to discuss a potential sale with the Lithuanian government. The loss-making unit dragged its group results to a record net loss in the second quarter. Lithuania plans to start importing liquefied natural gas (LNG) in 2015, and seeks to build power links to Sweden and Poland by end-2015 to cut its energy dependence on its former Soviet master, Russia. Analysts said the minister's departure should not affect this strategy. "There is a broad agreement among the country's top politicians to support all these projects, so the minister's removal should not impact their implementation much," said Ramunas Vilpisauskas, head of the Vilnius Institute of International Relations and Political Science.

[ROCKMAN]

Just so folks understand the dynamics involved: the US currently imports much more oil than is required for domestic consumption. The best guess is around 3 million bopd. This allows two advantages. First, US refineries can generate profit from their excess refining capacity. Second, it allows those refiners to tie up more oil via long term contracts then the US currently requires. It time some of that oil might be better marketed in the US. So why does a country like China, a major oil importer, want to export products? IMHO same reason as US refiners do it: to control the flow of those resources. The Asian market for refined products is growing now only in China but most other countries in the region. But there’s one big difference between the dynamic in the US vs China: the Chinese govt ultimately has control of the process and can make decisions not only based upon economic factors but also political leverage. One does not only have to consume oil to have power but also can control the flow to other countries to exert influence over them. IOW the more oil China buys, whether they consume the products or exports them, allows great influence on the global market.

Reuters - China National Offshore Oil Corp has started oil product exports, the company said on Friday, joining oil majors Sinopec and PetroChina to conduct overseas sales from its own refinery. The sales by CNOOC are expected to drag on margins for oil products in Asia at a time when new refining capacity and upgrades have sharply increased supply in the region.

CNOOC, parent of China's top offshore oil producer CNOOC Ltd , loaded its first 12,000-tonne jet fuel cargo for export from its Huizhou refinery in the southern province of Guangdong on Friday morning. The cargo will supply Hong Kong airport. The company will export more oil products from its 240,000-bpd Huizhou refinery later on. CNOOC won approval in March from the National Development and Reform Commission to export oil products processed from imported crude oil, it added.

Industry sources have said CNOOC received a quota from the government to export about 100,000 tonnes of oil products in the second half of the year. Under the quota, CNOOC, will be able to export diesel, kerosene, gasoline and naphtha depending on the market situation.