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| China-Japan-Koreas |
| China to Have Strategic Oil Reserve Soon |
| 2005-06-12 |
| China is on track to complete building its first strategic oil reserve storage tanks by August, but Beijing has not indicated when it may start filling them in the face of high oil prices, an industry official said on Friday. The world's second-largest oil consumer after the United States will finish the crude oil tank farm in Zhenhai, located in the port city of Ningbo in the booming east coast province of Zhejiang, on schedule with plans announced last year, he said. No salt domes, just tanks? Heck, this military district is already responsible for Taiwan, just add a few more targets into the mix. The 5.2 million-cubic-meter (33 million-barrel) facility will hold about one-third of China's initial planned emergency reserves, the foundation of state efforts to bolster energy security as consumption soars and domestic output plateaued. "The entire infrastructure in Zhenhai will be completed by August. But prices are so high right now and it is not clear when Beijing will kick off emergency stockpiling activities," the Chinese official told Reuters. A top Chinese government official said last week that China would build up its emergency stockpile gradually, lessening the impact on global energy prices. He did not say when Beijing could begin filling the tanks, a move being closely monitored by oil traders fearful that even a modest build will add stress to a taut global crude market that some fear may struggle to meet global demand later this year. China's oil demand is forecast to rise by almost 8 percent this year to nearly 7 million barrels per day (bpd), half last year's explosive growth rate but still increasing its dependence on foreign crude. Cars are selling like hotcakes these days. And Chinese rarely buy used cars. It now imports 40 percent of its oil needs and the growing reliance on imports has moved energy up the political agenda, especially as prices cling above $50 a barrel. China has also earmarked three other sites for strategic stocks along the eastern seaboard, aiming to build a total of 16.2 million cubic meters (101.9 million barrels) of reserves in the next five years, equivalent to 20 days of consumption. Whee, 20 days. I suppose the giant U.S. supply is only 60 days, but still. This would augment the commercial stocks of the country's major refiners and importers, who typically hold 10 to 30 days worth of supplies, and give Beijing some cushion against any unexpected supply outages, particularly from the Middle East. The other crude oil tanks will be in Aoshan in Zhejiang, Huangdao in Shandong and Dalian in Liaoning. The capacity in Aoshan will be similar to Zhenhai, while the other two sites will each boost 30 tankers storing up to 3 million cubic meters of oil. |
| Posted by:gromky |
| #4 To wit Ima mean the short term increase price caused by demand was quickly damped by a large reserve. /Macro is easy |
| Posted by: Shipman 2005-06-12 19:48 |
| #3 In the short term yes, but consider the long term price viz. short term fluctuations in the ice market.... in Pensacola last year it was 1.5 us a lb on the nreal spot market.. the price variation was soon dampened by the large terrestrial ice reserves. |
| Posted by: Shipman 2005-06-12 19:47 |
| #2 Price will go up - with China purchasing all the "extra" oil necessary to fill it's new strategic reserve (demand ^. then price ^) |
| Posted by: Hupavilet Sholuth6087 2005-06-12 17:31 |
| #1 It's a good thing. Reserves have a quieting effect on price swings. |
| Posted by: Shipman 2005-06-12 11:31 |