China's oil stockpiling in first-half 2016 slows on tank shortage

BEIJING (Reuters) - China added 9.34 million barrels of crude oil to Strategic Petroleum Reserves (SPR), worth just over one day’s imports, during the first half of 2016, government data showed on Friday, cementing an analyst view that a few tankages were ready for fill during the period.

Since 2015, China’s record amount of crude oil imports have been driven more by flows into the country’s independent refineries rather than government stockpiling.

China boosted its SPR across nine bases by adding 1.28 million tonnes of crude oil in the first half of 2016, the Commerce Ministry said on Friday, in their first update in eight months on one of the world’s largest oil reserves.

By mid-2016, the government had 33.25 million tonnes of crude oil, equivalent to 243 million barrels, up from 31.97 million tonnes at the start of 2016. That equates to an average fill rate of 52,000 barrels per day.

The government’s last update was in September last year.

Seng-Yick Tee, analyst with consultancy SIA Energy, said 9.34 million barrels of crude oil or 102,000 barrels per day (bpd) were mostly added over a period of three months instead of six.

Based on data provided from China’s National Bureau of Statistics, the country had marked 43 million barrels during the second half of 2015, suggesting a fill rate of around 240,000 bpd.

“Today’s announcements confirm our earlier view that the government’s previous update was referring to stockbuild by March 2016 rather than the beginning of the year,” said Tee, adding there were a few new tankage space available during the period.

However, the pace of stockpiling quickened in the second half of 2016 as national oil firms started pumping fuel into two main new bases -- Tianjin in the north and Zhoushan on the east coast, Tee explained.

SIA Energy estimates the government’s stockpile reached around 5.6 million tonnes, or 222,000 bpd, during the second half of 2016, before it drops to 138,000 bpd for this year due to lack of new storage space.

Reuters has reported that China completed construction of 19 million barrels of new strategic reserve tanks in Zhoushan in August after several delays, and the construction of a large government reserve site in southern Guangdong is taking longer than expected.

(1 tonne = 7.3 barrels for crude oil)

Reporting by Josephine Mason and Chen Aizhu; Editing by Gopakumar Warrier and Sherry Jacob-Phillips