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Declining crude price in China's interest

China has been taking advantage of the declining international crude oil prices to largely expand its strategic petroleum reserve, according to reports by Chinese media.

Besides, the drops in oil prices have helped reduce China's expenditures and inflation, providing greater room for its planned economic management. China ranks 13th in the world in terms of crude oil reserve, reaching 24.65 billion barrels, only three notches behind the United States, which ranks 10th with a crude reserve of 36.5 billion barrels, according to the 2015 statistics of Organization of Petroleum Exporting Countries (OPEC).

China, however, was the second largest crude importing country in 2014, shipping 6.19 million barrels of crude oil from abroad every day, next only to the U.S. which imported 7.39 million barrels daily that year.

Many experts have blamed the declining oil prices on the shrunken demand caused by weak economies in the previously leading oil consuming countries.

As China's economy is relying heavily on energy-consumption, and its reliance on oil imports is not expected to change in a short period of time, it is estimated that a drop of US$10 per barrel in crude price will save China 107 billion yuan (around US$16.58 billion) a year, or 0.2 percent of its gross domestic growth (GDP) for 2014.

More importantly, the drastic decline in crude prices has given China a good opportunity to greatly increase crude imports for strategic reserve purpose. China began expanding its strategic petroleum reserve in 2006, with the goal of establishing a reserve equal to 90 days of total imports, or 550 million barrels based on OPEC statistics, by 2020. But China is now far from meeting that goal.

According to wire service reports, China has planned to increase its strategic petroleum reserve by between 70 million and 90 million barrels in 2016, which will be two times its 2015 amount.

China's strategic petroleum reserve will break the 300 million- barrel mark -- more than half of its set goal -- if next year's strategic imports reach 90 million barrels. By then, China will own the world's third largest strategic petroleum reserve, behind only the U.S. and Russia. (By Chiu Kuo-chiang & Bear)


Updated : 2021-09-18 21:40 GMT+08:00