ahojunk
RETIRED INTL MOD
- Joined
- Nov 17, 2014
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China's SPR, nobody really knows the amount.
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China may be stockpiling more oil than anyone realised
Steven Mufson
September 30 2016 - 10:48AM
One of the mysteries of the oil market is the question of how much crude oil China has squirrelled away in commercial and strategic stockpiles.
Now a satellite imaging firm called Orbital Insight claims to have an answer. It says that in May, Chinese inventories stood at 600 million barrels, substantially larger than commonly thought and nearly as big as the US Strategic Petroleum Reserve. Chinese storage capacity, which includes working inventory, is four times greater than widely used estimates, the firm says, adding that it has not only been able to count storage tanks, but it has also used imaging techniques to figure out how much oil is in the tanks.
Photo: Orbital Insight/ satellite imagery: DigitalGlobe/Orbital Insight/ satellite imagery: DigitalGlobe)
Artificial demand?
The issue could influence expectations in oil markets. If China has built larger reserves than previously estimated, that means much of what looked like oil demand over the past couple of years was not a result of higher consumption but of strategic planning. It would make OPEC's task of cutting output to drive up prices more difficult. And it could provide a buffer for China in the event of a sudden disruption in imported supplies.
The new estimate comes from a firm founded by James Crawford, who formerly worked on Google's book-scanning project. Crawford said he left Google because the price of Earth-orbiting hardware was falling and the amount of satellite images was booming, so he recruited some NASA scientists and started a new business. He has received backing from the investment firms Sequoia and Google Ventures. The firm pays a percentage of its revenues to satellite image providers.
"The broad vision to take large volumes of satellite imagery and make sense of what we're doing on the Earth and what we're doing to the Earth," Crawford said.
For its Chinese analysis, Crawford said the firm went back to images taken from 2010 to 2014 and counted the number of oil storage tanks built and destroyed and came up with a figure of 2,100 storage tanks, far higher than the 500 tanks in the industry standard database in TankTerminals.com.
Orbital also used its own algorithms to calculate how much was in the tanks.
"Floating roofs sit on top of crude oil tanks for a variety of reasons, for example, to minimise breathing and evaporative losses," the company said in a release. "As the reservoirs are filled and emptied, the roofs rise and fall, reflected in the crescent moon-like shadows from the walls of the reservoir. The size and shape of the shadow is a sensitive metric of the volume of oil held in the tank."
How much does China have?
The firm cannot, however, discern whether there are underground storage facilities.
The dispute over Chinese inventories will likely continue.
Orbital Insight's estimate far exceeds the figure given in a rare glimpse of China's oil supplies by its government. On September 2, the Chinese state-owned news agency said that China had 287 million barrels of oil in strategic storage sites in eight cities as well as in commercial facilities at the beginning of the year. Started in 2004, the Chinese strategic stockpile would only be enough to cover 36 days of oil imports, said the Xinhua news agency quoting CNPC Economics & Technology Research Institute. The country's goal is to have large enough strategic stockpiles to cover 100 days of imports, a target the government's five-year plan said might not be complete by the 2020 goal.
The US reserve is big enough to cover about 150 days of imports.
However, with low prices, China has been on a buying spree, many analysts believe. The nation has been importing a record 7.5 million barrels a day.
The Washington Post
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China may be stockpiling more oil than anyone realised
Steven Mufson
September 30 2016 - 10:48AM
One of the mysteries of the oil market is the question of how much crude oil China has squirrelled away in commercial and strategic stockpiles.
Now a satellite imaging firm called Orbital Insight claims to have an answer. It says that in May, Chinese inventories stood at 600 million barrels, substantially larger than commonly thought and nearly as big as the US Strategic Petroleum Reserve. Chinese storage capacity, which includes working inventory, is four times greater than widely used estimates, the firm says, adding that it has not only been able to count storage tanks, but it has also used imaging techniques to figure out how much oil is in the tanks.
Photo: Orbital Insight/ satellite imagery: DigitalGlobe/Orbital Insight/ satellite imagery: DigitalGlobe)
Artificial demand?
The issue could influence expectations in oil markets. If China has built larger reserves than previously estimated, that means much of what looked like oil demand over the past couple of years was not a result of higher consumption but of strategic planning. It would make OPEC's task of cutting output to drive up prices more difficult. And it could provide a buffer for China in the event of a sudden disruption in imported supplies.
The new estimate comes from a firm founded by James Crawford, who formerly worked on Google's book-scanning project. Crawford said he left Google because the price of Earth-orbiting hardware was falling and the amount of satellite images was booming, so he recruited some NASA scientists and started a new business. He has received backing from the investment firms Sequoia and Google Ventures. The firm pays a percentage of its revenues to satellite image providers.
"The broad vision to take large volumes of satellite imagery and make sense of what we're doing on the Earth and what we're doing to the Earth," Crawford said.
For its Chinese analysis, Crawford said the firm went back to images taken from 2010 to 2014 and counted the number of oil storage tanks built and destroyed and came up with a figure of 2,100 storage tanks, far higher than the 500 tanks in the industry standard database in TankTerminals.com.
Orbital also used its own algorithms to calculate how much was in the tanks.
"Floating roofs sit on top of crude oil tanks for a variety of reasons, for example, to minimise breathing and evaporative losses," the company said in a release. "As the reservoirs are filled and emptied, the roofs rise and fall, reflected in the crescent moon-like shadows from the walls of the reservoir. The size and shape of the shadow is a sensitive metric of the volume of oil held in the tank."
How much does China have?
The firm cannot, however, discern whether there are underground storage facilities.
The dispute over Chinese inventories will likely continue.
Orbital Insight's estimate far exceeds the figure given in a rare glimpse of China's oil supplies by its government. On September 2, the Chinese state-owned news agency said that China had 287 million barrels of oil in strategic storage sites in eight cities as well as in commercial facilities at the beginning of the year. Started in 2004, the Chinese strategic stockpile would only be enough to cover 36 days of oil imports, said the Xinhua news agency quoting CNPC Economics & Technology Research Institute. The country's goal is to have large enough strategic stockpiles to cover 100 days of imports, a target the government's five-year plan said might not be complete by the 2020 goal.
The US reserve is big enough to cover about 150 days of imports.
However, with low prices, China has been on a buying spree, many analysts believe. The nation has been importing a record 7.5 million barrels a day.
The Washington Post
