Saudi Aramco has sold a crude oil cargo to an independent Chinese refinery, its first spot sale to such a buyer in a sign that the world's biggest exporter is trying to expand beyond its state-owned customers in China, a source with knowledge of the deal said.

The 730,000 barrel (bbl) cargo will be lifted in June from Aramco's storage in Japan's Okinawa prefecture and shipped to China's eastern province of Shandong, the source said.

The buyer is Shandong Chambroad Petrochemicals Co., one of about 20 independent refineries in China nicknamed "teapots." The government allowed them to start importing crude oil in the second half of last year, part of Beijing's efforts to boost private investment and competition in oil refining, which is dominated by state-run groups.

Saudi Arabia, China's largest crude supplier, recorded a 7% increase in shipments in the first quarter of this year vs. the same year-ago level. This was a bigger-than-expected increase and showed how the world's second-largest crude importer was taking advantage of low oil prices by increasing its purchases by 13% during the period.

Early this year, a few China oil deals turned sour, shaking suppliers' confidence in these independent buyers, but Aramco did careful due diligence on Chambroad before sealing the deal earlier this month, the source said.

"Chambroad has had a good track record in issuing bank credits," the source said. Chambroad has an import quota for 2016 of 3.3 million tonnes.

Chambroad officials declined to comment on the deal. A Beijing-based Aramco media relations official did not immediately respond to Reuters' request seeking comment.

A senior executive from another Shandong teapot plant said his firm was also looking into processing high-sulphur grades from suppliers such as Saudi Arabia and Kuwait, but said the economics were not as attractive compared to oil from Russia or West Africa.

Teapot refineries, previously swing suppliers that processed poor quality fuel oil, have become a major contributor to China's incremental crude imports of nearly 800 Mbbl/d in the first three months of this year.

Saudi Aramco leases about 6.3 MMbbl crude oil tanks from Japan Oil, Gas and Metals National Corp.--JOGMEC--in Okinawa, Japan, to market to Pacific Rim countries, according to Aramco's website.