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China Stage 2 SPR additions Wanzhou & Caofeidian

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 13 years, 11 months ago.

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  • #3264

    Charles Randall
    Participant

    China picks Caofeidian, Wanzhou for SPR tanks-paper
    BEIJING, Dec 30, 2008 Reuters China has selected Caofeidian, in northern Hebei province, and Wanzhou, in southwestern Chongqing municipality, as bases for its second phase of strategic oil storage reserves, state media said, citing an unnamed energy official.
    “So far, has only completed the construction work of the first phase of its state strategic oil reserve base,” the China Economic Times reported on Monday, citing an official from the National Energy Administration, as saying.
    The newspaper, sponsored by the Development Research Centre of the State Council, China’s cabinet, did not provide details on how much of the tanks in the first phase had been filled. The tanks have a capacity of some 102 million barrels.
    The head of the energy administration said in an article on Monday that China would use the fall in global energy demand to boost its fledgling oil reserves against future supply shocks, including pushing ahead with building a second phase.
    Beijing has completed plans for the second phase of state storage facilities that could hold up to 26.8 million cubic metres of oil, or some 170 million barrels, but has not disclosed where the facilities are or whether construction has begun.
    Caofeidian, a few hours by car from Beijing, has been able to receive very large crude carriers from the summer after state-run Sinopec erected a new crude terminal that can pump oil to its Tianjin refinery as well as Yanshan refinery in Beijing.
    Caofeidian also houses other massive industrial projects, including a 10-million-tonne steel mill under construction by Shougang Group, a state-run conglomerate who was forced to move its steel plant from Beijing for the summer Olympics.
    Wanzhou, in landlocked southwestern China, has already been selected as a location to store government-owned refined oil product reserves.
    China’s strategic refined oil product stockpiles are operated by the State Bureau of Material Reserves, a subsidiary of the National Development and Reform Commission .
    The country’s crude oil reserves are managed by the State Petroleum Reserves Center, an agency now under the National Energy Administration, which is regulated by the NDRC.

  • #6383

    Charles Randall
    Participant

    Here is update on China’s Stage 2 of SPR reserve development. Stage 1 SPR tanks will hold 102 million barrels crude (only partly filled now) & Stage 2 could hold an additional 170-209 million barrels of crude.
     
    I picked this out to remind crude price forecasters to avoid thinking the current estimates of $45-55/Bbl crude price will last any length of time and avoid looking as foolish as T Boone estimates of $150-200/Bbl prices (and stuck lot New England diesel purchasers with $4/gal diesel in $2.75/gal market).
     
    The WW strategic reserves are not estimated at ~4 billion barrels with 1 billion barrels government/state owned and the rest private owned reserves. The countries filling these SPR’s add around 1 million bpd to total crude demands when there isn’t any problems. Recent size increases by US and additions of new China & India SPR’s and the increased government buying led to a lot of crude price increase until the high cost at $85-100/Bbl drove them out of the market. Current low price levels as well as MidEast uncertainty will hasten fill rates and give price support to more fundamental values than current demand destruction led pricing.
     
     
    The US average had been ~140 MBD until Venezuelan Strike & Hurricane impacts led to increase size from 574 Million BBL to 715 Million BBL and the purchase rate jumped to fill rates of 10-40 Million BBl per year to achieve it and new size relates to ~360 days of imports. The US & Japan have similar high levels of SPR that are in the 550-700 million BBL range and equate to 180-360 days of operation.  IEA members are required to maintain 90 days of import storage (except for exporting countries of course) and make up a bulk of the other 26 countries accounting for a great deal of the other 2.5 billion BBL SPR crude stored. And Russia, China & India are fast adding SPR volumes and development as this article indicates on China’s 2nd Stage taking it to half of US & Japans level already. Like the US which imports +50% of its Crude, both China & India are very exposed on import crude supplies since China imports nearly 1/3 of its crude now & India imports nearly 70% if its crude supplies.
     
    The current SPR size in both countries are extremely low comparatively (India=2weeks & China ~45-60 days) and so these additional pressure on demand will continue to grow and be exaggerated given the increasing fill requirements and compressed timing which will also continue cause self-defeating price impacts due required crude lower purchase price levels.
     
    <Note Wikipedia now has great recap WW on various countries SPR volumes @
     http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserve &gt;
     
    Regards

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