China reveals size of strategic oil reserve for first time
The National Bureau of Statistics revealed the official estimate of its strategic petroleum reserves for the first time yesterday, taking steps to improve transparency in its energy development after calls from the global community.
The National Bureau of Statistics revealed the official estimate of its strategic petroleum reserves for the first time yesterday, taking steps to improve transparency in its energy development after calls from the global community.
The announcement - four days after President Xi Jinping promised to release figures on oil reserves in a more comprehensive and timely manner - said the reserves, held at four locations, totalled 12.43 million tonnes of crude oil, or about 91 million barrels.
The stockpile amounts to roughly nine days' consumption, far below the international standard of reserving enough to cover three months of imports. But the figure only accounts for the first phase of a plan to build petroleum reserves, and China is expected to build up more in the coming years.
China has withheld its oil data in the past, reasoning it would suffer a price disadvantage were the figures released. But in recent months it has become more cooperative about its stockpile.
"We've always had some kind of government customs data for crude oil, and China became the biggest oil importer last year, so the market wasn't operating in the dark," said Simon Powell, head of sustainable research at CLSA.
"But this new development will enable markets to gain clarity on what China intends to do and how quickly it intends to do it."
In July, US Secretary of Energy Ernest Moniz and Wu Xinxiong of the National Energy Administration signed a memorandum of understanding for cooperation on strategic petroleum reserves.
"China doesn't belong to the Organisation for Economic Cooperation and Development (OECD), and it has no obligation to display this data," said Gordon Kwan, a researcher at Nomura Securities.
"This takes the world a step closer to achieving energy security and shows an increasingly cooperative China. It also means lower investment risk for many oil and gas producers."
The announcement yesterday did not include planned figures for second and third-phase strategic petroleum reserves, but state media released details in their reports. China intends to finish construction of the second phase of its oil-reserves infrastructure, holding nearly 200 million barrels, by 2020.
"The speed at which China can complete phase two and phase three will depend on factors like oil prices," Powell said. "China has profited from the oversold crude price."
China imports about 60 per cent of its oil. This year, it produced about 4.5 million barrels of liquified oil a day, 93 per cent of which was crude oil.
