BEIJING -China's list of crude suppliers reads like a who's who of the oil exporting world, but the sudden emergence of South Africa among the ranks has left many market watchers scratching their heads.
South Africa is sending cargoes of crude to China that rival volumes from the United Arab Emirates, Kuwait and Libya, despite not having enough production to meet its domestic oil needs.
According to data from China's General Administration of Customs, South Africa exported 2.33 million metric tons of crude to China in the January-October period, equivalent to around 56,000 barrels a day.
That is up a massive 5,100% from the 312,562 tons of crude that Africa's largest economy dispatched in 2006, while the country exported no oil to China the previous year.
"There's no domestic producer with that much capacity to suddenly draw upon, and given its bullish demand profile, there is no evidence to suggest the South African market's established supply balance would be able to absorb such a significant redirection of crude," said Steven Knell, an energy analyst at consultancy Global Insight.
China's General Administration of Customs insists that all crude imports are booked by point of origin, meaning that if the oil was produced in Saudi Arabia, then it would be counted as Saudi Arabian crude, even if it was unloaded in a third country before being sent to China.
"We calculate imports on the basis of the original place of production unless it's been processed into other oil products - for example, gasoline or diesel," a Customs official told Dow Jones Newswires.
However, China's oil products trade is broken down by category, such as gasoline, in the official monthly data and is separate from crude.
The reliability of China's energy data has been called into question in the past, notably by the International Energy Agency, which said in its latest World Energy Outlook that "considerable work" was still needed before Chinese statistics could be entered into its own databases.
Yet figures from South Africa's Department of Trade and Industry also point to healthy trade. According to its Web site, the value of South African petroleum exports to China in the January-July period totaled 6.7 billion rand ($958 million), or 99.7% of its oil trade.
So where is the crude coming from? Sasol, PetroSA Say Not Exporting Oil "It's an interesting riddle," said Trevor Houser, an energy expert at New York-based China Strategic Advisory.
South Africa's oil output in 2006 was 200,000 barrels a day, figures from the U.S. Energy Information Administration show, and the country mirrors China in relying on coal for the bulk of its fuel needs.
More than half of South Africa's oil consumption of 519,000 barrels a day last year was imported, largely from Iran, Saudi Arabia and African exporters Nigeria and Angola.
What domestic oil output it does have is mostly in the form of synthetic crude produced by Sasol Ltd. (SSL) using coal liquefaction technology advanced when the country was internationally isolated in the apartheid era.
The initial reaction of many analysts including Knell was that Sasol was sending synthetic crude to China to support its coal-to-liquids projects there.
In June last year, Sasol signed deals to build two CTL plants in China, each with a capacity of 80,000 barrels a day, in partnership with China's state-owned Shenhua Group and one of its units.
But Sasol spokesman Johann van Rheede said the Johannesburg-based company doesn't export any oil to China.
The Petroleum Oil & Gas Corp. of South Africa, or PetroSA, is the only producer of crude oil in South African waters, and Jopie Bosman, regional manager Far East, Middle East and Africa, said the state company also hasn't exported any crude to China.
She said PetroSA and Sasol, however, do export alcohols and distillates as chemicals to China, although the volume is at most 100,000 tons annually "and probably closer to half that."
"Sasol and ourselves are importing fuel, and I would suspect the other companies (operating refineries in South Africa) are more likely to export to Africa, and I'd be surprised if any product went to China," Bosman said. Stocks Draw Down, Blending Theories Touted Traders said a possible explanation was that storage tanks on the South African coastline were being emptied to take advantage of volatility in crude prices.
Earlier this year, forward prices were higher than the current market rate - a scenario known as "contango". This meant there was a greater incentive for traders to store oil and wait than sell it immediately.
Recently, however, this has changed, and it's been in the interests of traders to sell their stored oil. Forward prices are lower than the near-$100 a barrel cost of crude for front-month delivery.
"What surprises us about these (customs) numbers is the other buyers part," said a London-based official at a major trading firm, citing the fact that almost all South African crude exports go to China.
He added: "It just doesn't look right to us."
Two individuals familiar with South Africa's petroleum industry suggested the export figure might reflect an agent or agents in the country that are acting as a go-between for an Angolan producer, or it could even be a case of traders changing country of origin waybills during transit.
Bradley Way, a Beijing-based analyst at BNP Paribas, said blending of different types of crude could also be an answer for the spike in trade.
Chinese refiners are very specific about their crude requirements and may need different crudes to be blended to get a desired sulfur or acid content that fits the way their plants are tooled.
But whichever view they take, the only thing analysts seem able to agree on is that nothing about the nascent trade is certain.
"It's a mystery indeed," mused Knell. "I'd say what we have here is clear evidence of the lengths to which China will go to secure its monthly crude call."