China's crude oil reserves can only sustain for 23 days

The National Bureau of Statistics recently released news that the first phase of the national oil reserve project was completed and put into use, including four national oil reserve bases such as Zhoushan, Zhenhai, Dalian, and Huangdao, with a total reserve capacity of 16.4 million cubic meters and reserve crude oil of 12.43 million tons. The 12.34 million tons of oil reserves are more or less, which is a topic of concern to many people.

The energy reserves of a country are mainly divided into strategic reserves and commercial reserves. Strategic reserve is a kind of resources controlled by the government. It is only put in during a war or a serious natural disaster, and it is used to ensure the continuous supply of national energy. Commercial reserves are the reserves for which petrochemical companies or other economies are responsible for construction, with the aim of suppressing drastic price fluctuations.

In March 2001, the Chinese government first proposed the strategy of oil resources. In 2003, China officially launched the national oil reserve base plan and decided to complete the construction of the hardware facilities of the oil reserve base in three phases in 15 years. After all the three phases of the project are put into use, the total strategic inventory in China will be raised to 500 million barrels (about 68.21 million tons).

As far as the current construction situation is concerned, a report released by China National Petroleum Corporation in January 2014 shows that as of the end of 2013, China’s strategic crude oil reserve capacity has reached 141 million barrels. According to the static calculation of China's oil consumption of 1.39 million tons per day in 2013, China's current strategic crude oil reserve is only sufficient for 8.9 days, commercial crude oil reserves can be used for 13.8 days, and the total national oil reserve static capacity is approximately 22.7 days.

The scale of China’s oil consumption is still increasing year by year. In 2013, oil consumption increased by 3.8% year-on-year. The China National Petroleum Corporation’s Institute of Economics and Technology has calculated the results of the demand forecasting model and considered the development of alternative energy sources. It is preliminary judged that the peak demand for petroleum in China is between 810 million and 870 million tons, which is around 2040. This means that the peak demand for oil in China will be more than 60% higher than the consumption of 507.4 million tons in 2013. If the oil demand peaks are used for dynamic estimation, even if all strategic reserve construction is completed and put into use, the strategic oil reserve will only be sufficient for normal use for 28.5-30.5 days.

In addition, China’s dependence on foreign oil will continue to rise on the basis of 58.1% in 2013. Whether it is a static calculation or a dynamic estimation, China’s oil reserve capacity is much lower than the 90-day safety standard set by the International Energy Agency. It is even lower than the current average of 172 days of its net importing member countries. In contrast, Japan has 165 days of oil reserves, the United States reached 240 days, and the oil consumption of the United States and Japan has reached or near the peak.

Over the past years, China's oil imports have long been the problem of “buying more expensive” and “more expensive and more expensive”. The lack of adjustment ability of oil reserves is one of the reasons for this phenomenon. In other words, there is currently not enough storage space in the country to import more when the oil price is low.

In addition, the reserve pools of the four reserve bases in China in the first phase are all built on the coast. The ground storage tanks not only occupy a large area, but also have large exposure targets. Admiral Nimitz, the commander-in-chief of the United States Pacific Fleet during the Second World War, said later: "In the Pearl Harbor incident, all the fuel of the U.S. military fleet was in the ground storage tank. There were approximately 4.5 million barrels of oil, as long as the diameter was 50 mm. Shooting warheads can make them die. If the Japanese destroy those tanks, the war will have to extend for two years.” Perhaps because of this concern, the current strategic oil reserves of the United States are highly secure, even if the perimeter is affected* ** Attacks can also be safe.

Therefore, the use of the first phase of the oil reserve project has an important guarantee function for China’s economic development and national defense construction, but at the same time it must be noted that China’s current energy security risks are high and a complete petroleum strategic reserve system is established. Safe oil reserve bases and facilities to ensure energy security are indeed a long way to go.