China, the world’s second largest oil consumer, has filed a record high crude imports of nearly 9% in 2015, enlarging its domestic reserves, while projecting to increase exports of refined oil products, as its domestic oil demand growth is likely to decrease to 4.3% in 2016, Reuters wrote. State-run China National Petroleum Corporation’s (CNPC) estimates of oil demand are higher than a recently published outlook by Energy Agency (IEA) that put growth in China’s demand for oil products in 2016 at 3.1%. CNPC also forecasts that natural gas consumption would rise 7.3% in 2016, compared with growth of 5.7% last year.

The large crude imports amid China’s economic slowdown indicate Beijing’s intention to re-direct stored oil to exporting of refined products. In 2015, diesel exports jumped almost 75%, while gasoline and kerosene shipments both rose about 16%, as Chinese refineries boosted processing to a record of 10.48b/d. China National Petroleum Corp. said in its annual research report that oil refining would increase 5.3% in 2016, and net export of oil products will rise by more than 30%, wrote The Financial Times. The country is thus set to expand its refinery capacity to reach 14.4mb/d in 2016, up 1.3%, CNPC informed, according to Reuters.

Experts estimate that China will ship between 226,000 to 270,000b/d of diesel in 2016, approximately 70% higher than last year’s 147,000b/d. China’s record fuel exports may thus threaten Asia’s oil refineries as Chinese exports of diesel, kerosene, and gasoline will be eroding margins, wrote Bloomberg.The export volumes will create an oversupply, as a result of which, the profit from diesel is expected to drop to $10 a barrel in Asia, $5 down compared with 2015. Global average refining margins fell 34% in 2015, and have further dropped to the level of $11.90 a barrel in Q1 of 2016, Bloomberg added, citing data by BP Plc.

In related news, Russia was reported to have beaten out Saudi Arabia as China’s top crude oil supplier in December 2015, with a record of 1.13mb/d from Moscow, up 29%, and 1.05mb/d from Riyadh, down 1.2%. The shift in crude imports occurs due to robust demand from independent Chinese refiners that prefer Russian shipments over high-sulphur barrels coming in from the Middle East, Reuters added.