CHINA OIL RESERVES
China has for the first time offered a formal estimate for a portion of its strategic petroleum reserves, following pledges of greater transparency of its oil stockpile size.
Xi Jinping, China's top leader, said in Australia last weekend that the country would start regularly releasing information about its strategic petroleum reserves, building on an agreement this summer between US and Chinese energy officials.
The National Bureau of Statistics said on Thursday that the first stage in building its strategic reserves was complete and holds 12.43m tonnes, about 91m barrels of crude in four locations.
The figure corresponds to unofficial estimates a few years ago from China's top energy regulator at the time but is slightly lower than assumed by many analysts in the west.
"It's related to the new leadership drive to be market-oriented and transparent. It's a positive step," said Wu Kang, the Asian managing director for Facts Global Energy, a consultancy.
However, the statistics bureau did not quantify the size of its second or third stages in the national plan to build strategic oil reserves. Some of those sites are complete and being filled while others are under construction.
Argus Media, the energy industry publication, estimates that China has a total of 150m barrels of reserves in its seven completed strategic depots. Energy Aspects, a London-based consultant, reckons China has bought about 87m barrels of crude for its SPR in 2014, a figure that could rise by another 20m barrels by the end of the year.
Stocks held in the four depots belonging to the first part of China's stockpile amount to roughly nine days of consumption, well short of the 90 days of imports recommended by the International Energy Agency. China imports roughly 60 per cent of the crude that it uses.
If China is aiming for 90 days of import cover, Energy Aspects estimates China will need to hold 540-600m barrels of crude into its SPR.
Attempts to quantify China's strategic reserves are complicated by commercial reserves maintained by the country's state-owned oil duopoly. CNPC, parent of listed PetroChina , and Sinopec as well as government officials have long argued that revealing the level of the country's reserves would result in China paying higher prices when it buys oil.
Purchases for strategic reserves "pale in comparison to what we see from the commercial sector," Tom Reed, editor at Argus Media in London, said in a recent speech. He estimated total commercial reserves at about 260m barrels.
Falling crude oil prices this autumn could provide an opportunity for China to fill its reserves in a more systematic way than it has in the past.
More transparency over China's strategic oil reserves could also pave the way for an Asian energy agency modelled on the IEA, according to ideas being aired in Beijing.
The proposed Asian Energy Security Agency could unite major oil consuming countries, such as China, that are not part of the Organisation for Economic Cooperation and Development and therefore ineligible to belong to the IEA. There are only seven OECD members outside Europe or North America: Israel, Turkey, Chile, Japan, South Korea, Australia and New Zealand.
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