Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Analysis: China's slow strategic petroleum reserves build signals reduced dependency for energy security

Energy | Oil | Crude Oil | Refined Products | Coronavirus

Back in black: The oil market’s way forward


Platts Market Data – Oil

Capital Markets | Commodities | Oil | Crude Oil | Refined Products | Fuel Oil | Gasoline | Jet Fuel | Naphtha | Marine Fuels | Equities | Financial Services | Banking | Non-banks | Private Markets

North American Crude Oil Summit, 3rd annual

Natural Gas | Oil | Petrochemicals | Olefins

Iran to halt condensates exports to make more gasoline, petchem feedstocks at home

Analysis: China's slow strategic petroleum reserves build signals reduced dependency for energy security


Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports

Supply and demand trends, government actions, exploration and technology

Daily futures summary

Weekly API statistics, and much more

Singapore — China's pace of strategic petroleum reserves growth slowed over mid-2016 to mid-2017, compared to the previous two years, in a sign that Beijing was comfortable in lowering its dependency on those reserves for energy security.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The country did not bring any new SPR storage site on stream in that period.

But the country's implied crude stocks growth over the same period hit a record high, suggesting more crude barrels went into commercial storage.

Some analysts expected China to need more crude to build its SPR in H2 2017, and also in 2018, because of more SPR storage sites coming online.

PIRA Energy Group, a unit of S&P Global Platts, expects China to build 100,000 b/d of crude stocks for its SPR in 2018.

The National Bureau of Statistics at the end of December said the country's SPR had reached 37.73 million mt of crude as of mid-2017, or 276.56 million barrels, up 4.48 million mt, or 89,968 b/d from 33.25 million mt recorded in mid-2016.

The SPR stocks build pace was 37% slower than the 143,195 b/d over mid-2015 to mid-2016, and was at only one-third the pace of 274,524 b/d over mid-2014 to mid-2015, S&P Global Platts' calculations based on NBS data showed.

"No new SPR storage site was launched over the period [mid-2016 to mid-2017], preventing the government from bringing in more crude to build the reserves," Wang Zhuwei, senior analyst with S&P Global Platts' China Oil Analytics said.

The nine SPR storage sites, which were in use as of mid-2017, were the same as of mid-2016 -- having a total capacity of 198.83 million barrels, according to NBS announcements. In contrast, the Zhoushan II site in Zhejiang province, with a capacity of 18.87 million barrels, was put into use over mid-2015 to mid-2016.

From mid-2014 to mid-2015, the capacity of SPR storage sites had surged by 76.8 million barrels to 179.93 million barrels due to the launch of four sites -- Dushanzi, Lanzhou, Tianjin and Huangdao II.

Analysts estimate that Beijing would need more crude barrels from the previous period over mid-2016 to mid-2017 to build its SPR, amid expectations that PetroChina's Jinzhou (18.87 million barrels capacity) SPR storage site would have been put to use in H2 2017, while CNOOC's 31.45 million barrels capacity Huizhou site would be functional in 2018.


Due to limited availability at the SPR storage sites, the government has been gradually injecting crudes meant for its SPR into rented commercial tanks, Wang added.

Assuming the nine SPR storage sites were fully filled as of mid-2017, about 77.73 million barrels would have made its way into commercial storage, compared to nil in mid-2014.

"It is unlikely for owners of the commercial tanks to offer more space to store SPR barrels due to its lower lease rate, competing with commercial crudes," a Beijing-based analyst said. "This could be also have an impact on the SPR stock build rate."

Market sources said the annual lease rate at commercial storage tanks for SPR crude was around $1.2/b lower than that for commercial barrels, while the lease business for commercial crudes was thriving last year.


A policy paper dated May 2016 by the National Administration of Energy said that all the crude barrels stored in country could be used for state energy security if needed.

That was to say, for energy security purposes, the government is allowed to take barrels not only from SPR tanks, but also any other tank in country. With that policy, Beijing was not in a hurry to build up SPR stocks on the back of the 351.11 million barrels absolute volume increase from mid-2016 to mid-2017 in China's total implied crude stocks, Platts calculations showed.

The volume was more than 10 times the SPR stocks change over mid-2016 to mid-2017, which was only up 32.84 million barrels. Beijing does not release official data on its absolute oil stock levels.

The volume change figure of implied crude stocks during the mid-2016 to mid-2017 period was equivalent to 43 days of the country's net import cover, considering the country's net crude inflow of 8.08 million b/d between mid-2016 and mid-2017. As of mid-2017, China's SPR stocks were at the level to cover 34 days net crude imports.

The State Council in 2007 approved a long-term plan that envisioned the national petroleum reserves base reaching some 500 million barrels by 2020, or the equivalent of 90 days of net import cover.

-- Oceana Zhou,

-- Edited by Geetha Narayanasamy,