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China to massively increase oil storage capacity

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China plans to construct a total of 70 million cubic meters of storage for its strategic petroleum reserve (SPR) in three construction phases, a state-run newspaper said on Monday.

[BEIJING] China plans to construct a total of 70 million cubic metres of storage for its strategic petroleum reserve (SPR) in three construction phases, a state-run newspaper said on Monday.

Equivalent to 441 million barrels, that would equal about 60 days of China's current crude imports of about 7.4 million barrels per day, according to Reuters' calculations.

Though the newspaper did not say when the 70 million cubic metres of storage would be completed, the China Securities Journal reported that the government plans to build 44.6 million cubic metres, or 281 million barrels, of SPR storage sites by 2020, citing a draft government plan for 2016-2020 for the energy sector.

The storage sites being built over the next four years would equal roughly 38 days of China's current oil imports. It would add to the country's existing strategic reserves held in seven above-ground facilities at Zhoushan, Zhenhai, Dalian, Huangdao, Dushanzi, Lanzhou and Tianjin, as well as one underground facility also at Huangdao, with a total capacity of 28.6 million cubic metres.

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China, the world's second-largest oil consumer, eventually plans to build strategic reserves worth 90 days of net imports, using government-owned storage sites, compulsory stockpiling by state-owned companies and tanks built and operated by private firms.

China also plans to improve its pipeline network. To link inland users to crude import ports, China plans to build 23,000 kilometres of pipelines with transportation capacity of 570 million tonnes of crude oil by 2020, said the paper.

To push for a switch to cleaner energy resources, it also plans to build natural gas storage tanks to hold 4.6 per cent of the nation's total gas consumption by 2020, the paper said.

The share of natural gas consumption in China's energy mix will increase from the current 6 per cent to 10 per cent by 2020, the report said, with a gas pipeline capacity of 400 billion cubic metres.

China faces transportation bottlenecks between its energy-rich western regions and energy-hungry eastern manufacturing regions.

For example, large amounts of renewable electricity generation have been wasted because of inadequate power transmission capacity.

Going forward, the paper said that authorities would take "prudent study" on proposals to build new long-distance, high-voltage transmission lines, including 80 gigawatt (GW) of new cross-provincial transmission lines by 2020 to cope with 40 GW of planned new renewable capacity.

REUTERS

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