- Shandong province is known as the Texas of China’s oil refining sector for decades.
- It is set to expand its crude storage capacity by 10.26 million cubic meters, or 64.54 million barrels.
- This will be implemented at the end of this year, for storing cheap crudes.
- Two new storage tanks that have started Sinopec’s 1.6 million cu m tanks at Dongjiakou port in March and Baogang International’s 1.16 million cu m tanks at Dongying port in April.
- The rest 7.5 million cu m, targeted to be online as early as July, is mostly concentrated in Dongjiakou port area.
A recently published article in Platts, written by Oceana Zhou and Daisy Xu and edited by Aastha Agnihotri elaborates on the upcoming new capacity in Shandong province. It will add to the previous capacity of about 300 million barrels in the province. It is a home to nearly 80% of China’s small independent refiners.
Shandong comprising SPR and commercial stocks
- Independent refineries suffered from limited storage capacity in February and March when they cut refinery runs to as low as 40% amid the coronavirus epidemic.
- The refiners even ramped up their run rate to 73.5% in April,.
- But crude stocks remained high as they also lifted their crude imports.
- Satellite data from Ursa, showed changes in surface-based storage facilities.
- It also showed that all crude stocks in Shandong — comprising SPR and commercial stocks — stood at around 163.71 million barrels in end-April.
- It accounts for about 68% of Ursa’s monitoring capacity in the province.
“Storage tanks availability is tight, as different crude grades have to be put into different tanks,” a source with Qingdao port said. It also added that the port will receive an additional 2 million mt/month (14.66 million barrels) of crude in May-July on top of April level.
For the whole China, latest data showed that implied crude oil stocks were higher by 55.86 million barrels end-March compared to end-February. It was the heaviest monthly stock increment since December 2018’s 63.2 million barrels.
67% accounting for capacity utilization
China does not release official stocks or storage capacity data. Platts calculates the country’s net build or draw in implied crude stocks by subtracting refinery throughput data from the country’s crude supply data. The latter takes into account both net crude imports and domestic production.
Ursa data showed that total China inventories for the week ended April 30 were 908 million barrels, accounting 67% capacity utilization.
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