Tuesday, March 10, 2009
China urged to use floating storage
Tuesday, 10 March 2009
The president of China’s state-owned China Shipping (Group) Company says the country’s oil inventories have been filled to capacity. Li Shaode told Reuters on Monday that he proposed to the government it use some of its foreign exchange reserves to acquire floating oil storage. "The four onshore reserve bases have been fully filled, so we need to invest urgently in floating storage," Li said on the sidelines of the country's annual parliament.
Crude oil prices have fallen by around $100 per barrel since their peak last year.
Lin Boqiang, director of China Centre for Energy Economics Research at Xiamen University, was quoted by Reuters as saying floating storage was a “good idea”.
"China should do everything to take advantage of this short-term price opportunity; $40 oil is not going to last too long," he said.
China is usually secretive about its crude oil and oil products reserves, but figures show China’s crude oil imports rose 9.6% last year to 179 million metric tonnes (mt).
"We expect China's oil stockpiling to reach a peak in 2009, and continue into the next year," said Yan Kefeng, Beijing-based senior oil analyst with Cambridge Energy Research Associates (CERA).
He also said he expected China’s fuel oil demand to shrink in 2009.
Latest reports suggest at least 80 million barrels of crude oil are being stored aboard very large crude carries (VLCCs) worldwide.
The use of VLCCs for floating storage is estimated to keeping some 45 tankers employed, helping support freight rates for tanker operators.
Source: Tankerworld
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