Business | Oil & Gas
China to fill Aoshan tanks with Mideast oil by June
China will make its first crude fill into its second strategic oil storage facility at Aoshan by the end of May, signalling Beijing's determination to bolster its emergency inventories despite high oil prices.
- Reuters
- Published: 00:00 May 17, 2007
Singapore, Beijing: China will make its first crude fill into its second strategic oil storage facility at Aoshan by the end of May, signalling Beijing's determination to bolster its emergency inventories despite high oil prices.
The delivery of about 2 million barrels of Middle East crude into Aoshan comes after the world's second-largest consumer finished filling its first 33 million barrel facility, part of its target of a 100 million barrel buffer by the end of 2008.
"There is never a good time to buy, but they are clearly moving forward to complete the first stage of the strategic fill," said Kang Wu, a senior fellow at the East-West Centre in Hawaii, also associated with Facts Global Energy.
A China-based port source said that one very large crude carrier (VLCC) chartered by Sinochem Corp. was arriving from the Middle East and was scheduled to discharge at the terminal.
Imports rise 10.8%
"We have a VLCC coming to the strategic site May 23-24," the shipping source said.
A separate port source based in Eastern China confirmed a crude tanker would discharge into the country's Aoshan strategic storage tanks, while a trading source also said a VLCC was heading to the government tanks this month.
The second port source added that a medium-ranged tanker of about 30,000 deadweight tonnes had arrived at the terminal at Aoshan for discharge earlier this month, but it was unclear if the cargo was pumped into the strategic tanks. The tanker was carrying condensate.
Ten new tanks totalling 7.6 million barrels at Aoshan, an island off the eastern province of Zhejiang, will be completed and ready for operations in about a week following final tests, industry officials have said.
China has already pumped over 37 million barrels into its first Zhenhai reserve tanks on the east coast, exceeding its 33 million barrel capacity and signalling it has released some stocks from the Sinopec-operated facility back into the market.
China's imports rose 10.8 per cent in the first four months of the year, ahead of a 5.6 per cent rise in crude processing over the same period, which may also indicate stockpiling.
Analysts say China's growing pull on the world oil market is a supportive factor for prices, with benchmark London Brent up 12 per cent this year at $68 a barrel, after a five-year rally on growing demand and stretched supplies.
The extra demand for stocks will add 100,000-150,000 barrels per day to Chinese oil demand for years to come, said Facts Global Energy in a report this month.
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