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Page added on November 21, 2014
China Opens Up on Oil Reserves
China is lifting some of the secrecy around its stockpiling of oil reserves, as it disclosed for the first time that the first phase of its strategic petroleum reserves contains about 91 million barrels.
The disclosure on Thursday follows a pledge by President Xi Jinping to provide regular updates on the size of its emergency stockpile.
China’s National Bureau of Statistics said that phase one of its strategic petroleum reserves contained 12.43 million metric tons of oil, or about 91 million barrels, across four sites. The statement didn’t disclose the size of its second or third phases of reserves. By contrast, the U.S. strategic petroleum reserve has a capacity of 727 million barrels.
China consumes about 10 million barrels a day.
China intends to construct facilities that can hold up to 500 million barrels of oil by 2020, according to the U.S. Energy Information Administration. In addition to strategic government stockpiles, Chinese companies have also been building commercial stockpiles to hedge against price swings. State-owned Chinese oil companies have between 250 million and 400 million barrels of commercial storage capacity, according to the EIA.
The U.S. government has been a vocal supporter of China’s effort. Senior U.S. officials have said they are offering guidance to China on collecting and reporting oil-inventory data, and believe that greater transparency on the reserves of a major oil consumer like China is necessary for traders as well as for market stability.
The state-owned China Daily newspaper quoted Mr. Xi as saying earlier this week during a gathering of leaders of the Group of 20 major economies in Australia that China would release oil-reserve data in a more complete and timely manner.
8 Comments on "China Opens Up on Oil Reserves"
Plantagenet on Fri, 21st Nov 2014 12:16 pm
China is smart to follow the US lead and build their own strategic petroleum reserve. Today’s oil glut won’t last long—we’ll be back to a tight oil market in a few years.
Davy on Fri, 21st Nov 2014 1:10 pm
Planter, that statement seems likely. I hope you are right. Yet, we are nearing a turning point. The timing is uncertain but when it hits it is possible the economy will never recover a growth trend. If this scenario developes demand destruction will likely destroy supply in a downward spiral.
There is no reason anymore why our traditional BAU cycle must continue. Descent will be irregular, asymmetric, and random in reactions and results. IOW, we will have a shit storm on our hands.
Ram on Fri, 21st Nov 2014 7:31 pm
Wow. Sounds great all but for Iran.Since lifting of sanctions. Might have to be,postpone.Since with oil price low now,adding Iran would Lower the price more .
Makati1 on Fri, 21st Nov 2014 10:58 pm
As with gold, I don’t see China ever being totally open about their reserves of anything. A several millenia old culture does not change because the internet and globalization happens to be the current cycle. They know that they have the financial upper hand and are taking advantage of it while it lasts.
Four trillion dollars will buy a lot of resource stockpiles and I am sure they are getting rid of USDs as fast as possible without collapsing the current dollar system.
We certainly are living in interesting times.
rockman on Fri, 21st Nov 2014 11:40 pm
“…the first phase of its strategic petroleum reserves contains about 91 million barrels.” Actually from a practical point of view China has a much larger “SPR” then that number implies. The Chinese own many hundreds of millions of oil reserves: proven reserves in oil fields they own in other countries. Additionally they have long term purchase contracts from exporters that amount to hundreds of millions of bbls of future production.
And consider the Chinese are a 50/50 partner with the Saudis in a refinery that can process 200 million bbls of oil per year. Needless to say if there’s a sudden shortage of crude in the global market place that refinery will still receive that 600,000 bopd.
OTOH while the US gov’t owns about 700 million bbls of oil in our SPR it doesn’t own a single bbl in a foreign field nor does it have purchase contracts in place with any exporter. US companies do on both counts. But there’s no guarantee that oil will always make it to the US. In fact it’s very common in most foreign oil concessions that country has a “right of first refusal” on all production. For instance ExxonMobil might own a field in Country X’s offshore area producing 100 million bbls of oil per year. Country X probably has the right to buy every bbl as long as they pay the going market price. They are then free to consume the oil themselves or sell it to any buyer they choose. The US wouldn’t even be in a position to complain: the law doesn’t permit exporting oil/NG from gov’t leases without its permission. So even if the Brazil company Petrobra owns 100% of a DW GOM field they can’t ship it home without US gov’t permission.
Davy on Sat, 22nd Nov 2014 6:50 am
Mak said – Four trillion dollars will buy a lot of resource stockpiles and I am sure they are getting rid of USDs as fast as possible without collapsing the current dollar system.
Mak, you are being a propaganda bitch again. Mak, please explain what this means? And Mak, don’t tell me this is propaganda because you quote Stockman when he serves your propaganda purposes.
David Stockman’s Contra Corner
“China is a case of bastardized socialism on credit steroids. At the turn of century it had $1trillion of credit market debt outstanding—-a figure which has now soared to $25 trillion. The plain fact is that no economic system can remain stable and sustainable after undergoing a 25X debt expansion in a mere 14 years.”
Makati1 on Sat, 22nd Nov 2014 8:14 am
Davy, I give the leaders in China the credit they are due. That is, that they are intelligent and informed. I read all about the projects they are working on to take down the USD as the world’s reserve currency or, at least, to reduce it to a much smaller percentage of world trade. They would not be dumb enough to try to do it too fast as it would crash the market and turn the USD into its true form, toilet paper. But a few years…
There are now at least seven central banks with currency swap agreements and more lined up for approval by China. The countries approved:
New Zealand
UK
Singapore
India
Qatar
Russia
Canada
As for my info sources, I cover at least 50 different news/info sites per day. I read news in the countries online newspapers. I get the same info from multiple sites. And the info tells me that the USD’ days are numbered.
China has USD reserves that it is using to set up deals all over the world by the hundreds of billions of dollars. You will likely not see this in the US MSM. It would explain too much to the sheeple. Like why China is buying hundreds of tons of gold.
So, you can call it propaganda but then you are only used to getting propaganda in the news programs. Facts get in the way in America today. You need more distractions to drown out the occasional bad news from the outside world. What is the latest distraction, Ferguson? Gay marriage? Immigration?
Davy on Sat, 22nd Nov 2014 9:25 am
Mak, you didn’t answer the $25Trillion question as usual instead you post further propaganda. I call your puk propaganda because it is unbalanced and serves your purpose of Asian advancement and western diminishment. I am will to acknowledge the diminishment of the dollar by many countries. I have also comment several times the advantages for all involved except the den of thieves in DC/NY. Please answer the question Mak. If you do it will have to include ugly Asian facts which is hard for a propaganda bitch to deal with.