(EnergyAsia, December 30 2014, Tuesday) — As if China needed any encouragement, the near 50% collapse in oil prices since June has greatly aided its crude stockpiling and import programme with desperate suppliers lining up to unload their cargoes at huge discounts.

Brent, the benchmark crude that prices much of Asia’s oil imports, is trading below US$60 a barrel and could fall further to new six-year lows to Beijing’s delight as it accelerates crude imports for stockpiling and to feed its rising refining capacity.

Analysts expect Chinese state firms to import between 50 and 60 million barrels of crude for three new storage sites in 2015, and by up to 100 million barrels in 2016 to complete the government’s official target to stockpile 500 million barrels of crude by 2020. This does not include storage held by China’s private companies and in tankers berthed in offshore locations.

Chinese refiners are also joining the import frenzy to feed at least 4.3 million b/d of new capacity that they are expected to start up between 2012 and 2018, said the International Energy Agency (IEA). According to BP, China’s refining capacity rose from 10.3 million b/d in 2010 to 12.6 million in 2013.

With the unexpected oil price collapse, China will not only complete its stockpiling programme ahead of schedule, its planners could be encouraged to raise their target as well as expand the country’s tank storage capacity.

According to the IEA, China has completed four stockpiling bases with a combined capacity of 103 million barrels under the first phase of its strategic petroleum reserve (SPR) plan. It is building the project’s second phase and is planning the third phase that will complete the SPR’s target to hold 500 million barrels of crude by 2020.

Despite a widely publicised slowdown, China’s economy is still expected to grow by at least six percent a year over the next few years that will underpin the country’s rising demand for oil, gas and coal. The world’s second largest oil consumer will use 11.34 million b/d in 2015, up by 3.3% from 2014 to follow on a 3.5% rise in 2013, said the US Energy Information Administration (EIA).

As the world’s oil supply glut worsens, China has become the most important major market for producers to lock in their supply contracts.

Tanker owners and brokers said that since mid-2014, there has been a sharp surge in vessel booking and oil traffic headed for China, pushing chartering rates to their highest levels in five years.

This entry was posted in and tagged . Bookmark the .