* State reserves administration announces 1st public oil auction * 7.38 mln bbl for sale on National Oil Reserve Centre platform * Volume is worth around $540 mln based on current market prices * Barrels on offer include Abu Dhabi, Oman, Qatar crude oil grades (Adds detail, analyst and trader comment) BEIJING, Sept 14 (Reuters) - China's state reserves administration said on Tuesday it would auction around 7.38 million barrels of crude oil, mostly from the Middle East, on Sept. 24, marking its first ever public sales of strategic oil inventories. The National Food and Strategic Reserves Administration last week said it would release oil reserves to the market in phases to help stabilise prices. The volumes on offer in the first auction, which will be held on a National Oil Reserve Centre platform, were broken down into five crude oil grades. Some 2.95 million barrels of Abu Dhabi's Murban is up for grabs, along with barrels of the emirate's Upper Zakum grade, Qatar Marine, Oman crude and Forties Blend from the North Sea, details provided by the administration showed. All of the oil is currently being stored in bonded warehouses in the port city of Dalian, in northeast China's Liaoning province. Most was delivered into reserve tanks in April and May 2020, suggesting it was picked up at very low prices amid a historic plunge in crude futures last year as the rapid spread of the coronavirus battered fuel demand. "By auctioning some of the lowest-cost reserves, the sales may help cool prices but also make a profit - killing two birds with one stone," said a Beijing-based oil trader, estimating the oil was bought at an average of $40 a barrel. Benchmark Brent crude has gained some 42% this year as oil demand bounces back. It was trading up 0.3% at $73.70 as of 1453 GMT, meaning the 7.38 million barrels being auctioned would fetch around $540 million at current market prices. China, the world's biggest importer of crude oil and most other major commodities, has been taking various steps to try to tame rising commodity prices this year, including selling off strategic metal stockpiles for the first time in over a decade. It rarely releases any information on its Strategic Petroleum Reserve (SPR). "This round is much smaller than market expectation and this is likely the only batch for this year," Energy Aspects analyst Liu Yuntao said by email. "So it's bullish (for prices)." "China will make SPR rotation more frequently, but probably only ... from next year. This one looks like a trial run." Bidders must comply with national refining industry policy and have sufficient import quotas to take the bonded crude, the administration said in its notice, adding that the oil should be used for the production of chemicals. The administration said last week the release was mainly for integrated refining and chemical plants. Potential bidders should deposit a trading margin - set at 40 yuan ($6.21) per barrel - to a designated account by 5 p.m. Beijing time (0900 GMT) on Sept. 22, the administration said. There will be a mock bidding session the following day before the real auction on Sept. 24. No transaction fee will be levied on any sales, the notice said, adding that volumes purchased at auction were not for resale. The table below shows a breakdown of the crude on offer, as described by the state reserves administration. Grade Volume (barrels) Batch 1 Qatar Marine 951,137.06 Batch 2 Forties 1,095,565.49 Batch 3 Oman 1,790,956.51 Batch 4 Murban 2,953,927.17 Batch 5 Upper Zakum 592,030.55 Total 7,383,616.78 ($1 = 6.4380 Chinese yuan renminbi) (Reporting by Muyu Xu in Beijing, Chen Aizhu in Singapore and Tom Daly Editing by Pravin Char and Mark Potter)
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