July 3, 2009 / 8:22 AM / 10 years ago

UPDATE 2-China crude stocks near IEA member level-Tanaka

* China’s crude stocks equal to 86 days of imports - Tanaka

* Four days away from 90-day standard needed to join IEA

* Implies about 300 mln bbls oil stocks, more than estimated

(Adds analysts comments and context)

By David Stanway and Eadie Chen

BEIJING, July 3 (Reuters) - China’s state and commercial stocks of crude oil were equivalent to 86 days of net imports, only 4 days short of the amount needed to join the International Energy Agency, IEA head Nobuo Tanaka said on Friday.

Based on net crude imports of 1.28 billion barrels last year, the figure suggested Chinese oil reserves of about 300 million barrels.

“China may now only be four days away from the 90 days IEA members are required to maintain,” Tanaka told a conference in Beijing. “The figure is very surprising, I agree.”

Tanaka said he would welcome China as an equal partner in the IEA, the industrialised world’s energy watchdog and consuming nations’ counterpoint to OPEC, but said he did not say China would ever join.

The data tallies with those released by OGP, a Xinhua-run news letter, which said China’s crude oil inventories, including both commercial stocks and strategic petroleum reserves (SPR), rose 0.4 percent during May to 38.75 million tonnes or 283 million barrels.

Chinese officials have said they want to use this year’s lower oil prices to build up reserves of crude oil.

Zhang Guobao, head of the National Energy Agency, told Reuters last month that China aimed to eventually meet the OECD standard of 90 days, and had approved the construction of a second phase of oil reserves in a bid to get closer to that target. [ID:nPEK127080]


But joining the IEA might run against China’s interests. The transparent disclosure required of IEA members might compromise China’s freedom to manoeuvre in the oil market, analysts said.

“It is detrimental to China’s strategic interest,” said Daniel Liu, a Singapore-based energy strategist from MF Global.

“If sensitive inventory level is totally publicised every month, speculators could outguess China’s (stategic stocks) filling price trigger or release trigger, and front-run China,” he added.

China has filled its first phase of state oil reserves, which can hold 102 million barrels of oil, and may eventually build a third phase, which would take total storage capacity to 476 million barrels.

Although data on state reserves is hard to come by, information about commercial stocks of crude is even more patchy.

Analysts say China’s commercial stocks have grown this year. Refiners have taken advantage of relatively cheap input costs as they prepared to drum up production, with an eye on higher fuel prices.

For a factbox about China’s state oil reserves, please click [ID:nPEK327394]

For a factbox about China’s commercial oil storage, please click [ID:nPEK186345]

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