Taking advantage of the low oil prices, China increased its Strategic Petroleum Reserve (SPR) by almost 14 percent between June 2016 and June 2017, according to data by its National Energy Administration (NEA).
As oil prices increased in the third and fourth quarter this year, the pace of the Chinese state oil reserve stockpiling has eased, according to analysts cited by Reuters.
China rarely releases figures about its strategic reserves, and the data announced today is the first in eight months.
According to the NEA, China had 37.73 million tons of oil, equal to 275 million barrels, in nine bases by the middle of 2017, up from 33.25 million tons at end-June 2016.
In the previous Chinese update on its SPR, in April 2017, China said it had added 9.34 million barrels of crude oil to its state reserves during the first half of 2016, equal to an average fill rate of 52,000 bpd.
Reuters has estimated the fill rate in the June 2016-June 2017 period at 89,600 bpd, higher than the H1 2016 average, but much lower than the 2015 fill rate of 240,000 bpd.
“Stockpiling picked up in the second half of 2016 as the government took advantage of lower crude prices and filled up some newly built tanks,” Emma Li, senior analyst at Thomson Reuters Oil Research, said, commenting on the Chinese data.
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The rate of the stockpiling, however, eased in the second half of 2017, following the rebound in oil prices, according to Li.
China’s irregular and opaque reporting of SPR data leaves analysts guesstimating how much oil storage capacity and oil in storage the country really has.
Last month, satellite imaging data suggested that China had started to build its crude oil inventories after two months of declines, Orbital Insight said. According to the company’s data, the first nine days of November saw an inventory increase of 37 million barrels, after a 120-million-barrel draw in September and October. Earlier Orbital data suggests that over the three years from 2014, China has built its inventories by 22 million barrels on average over the last two months of the year.
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By Tsvetana Paraskova for Oilprice.com
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However, China’s oil imports in 2018 are projected to exceed 10 million barrels a day (mbd) or 71% of its oil needs. This is based on a projected 7% economic growth in 2018 and a continued production decline in its two largest oilfields: Daqing and Shengli because of rising costs of production.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London