China accelerates stockpiling of state oil reserves over 2016/17

[BEIJING] China's state oil reserves increased by nearly 14 per cent between June 2016 and June 2017, official data showed, picking up pace from the previous six months.

Analysts attributed the increase to the government taking advantage of low oil prices to keep Strategic Petroleum Reserves (SPR) high, and said stockpiling had eased in the third and fourth quarter of this year as oil prices rebounded.

China had stored 37.73 million tonnes, or 275 million barrels, in nine bases by mid-2017, up from 33.25 million tonnes at the end of June the previous year, according to the data from the National Energy Administration (NEA). The latest number was largely in line with forecast of 38.90 million tonnes from Thomson Reuters Oil Research.

The nine bases are Zhoushan, Zhoushan expansion, Zhenhai, Dalian, Huangdao, Huangdao SPR, Duzishan, Lanzhou and Tianjin.

China rarely releases data on its SPR volumes and this is the first update in eight months of its crude oil reserves.

Adding 4.48 million tonnes of crude oil over the 12 months to June 2017 is equivalent to adding 89,600 barrels of oil per day (bpd). That's higher than the average rate of 52,000 bpd in the first half of 2016, but much lower than the filling rate of 240,000 bpd notched in 2015.

"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," said Emma Li, senior analyst at Thomson Reuters Oil Research.

CNPC's 2.58-million tonne facility in Jinzhou, Liaoning and Sinopec's 2.74-million tonne plant under Tianjin Phase 2 was rapidly filled in the fourth quarter of 2016 and reached full capacity in Q1 2017, she said.

Ms Li said the pace of stockpiling eased again in the third and fourth quarter this year after crude oil prices rebounded.

Stronger demand from refineries this year also meant SPR sites had to wait longer to get crude volumes from ports.

China plans to accelerate construction for the second phase of its SPR and bring forward the third phase, the government said in July.

REUTERS