China is becoming an increasingly attractive region for tank storage following the liberalisation of the country’s teapot refineries, according to head of ICIS China’s research team Li Li
The oil price crash in 2014 and unleashing of the hidden force from the teapot refineries in 2015, made China’s crude oil market suddenly become one of the hottest topics in the global energy community.
In the past, China’s oil storage market was mute from the global players’ ears, as most of the tanks are operated by state-owned enterprise (SOE) as inventory for their refineries or as commercial operation usage, or as mysterious strategic petroleum reserves by the country.
It seemed there were few chances for private investors before the crude oil market became liberalised. Private companies used to build lots of fuel oil tanks when the industrial fuel market was flourishing, or build distillate tanks if they got close relation with local SOE majors’ branches.
Vopak has pioneered phase I of its crude oil tanks in Hainan Yangpu in south China and some majors such as Exxon Mobil and Saudi Aramco have integrated oil storage in their joint venture Fujian refining entities.
However, global trading houses such as Vitol are showing increasing interests in renting crude storage (bonded storage) in China, and may also be regretting why they were so cautious to build tanks by themselves in Shandong or other coastal ports in China.
The third-party, independent crude oil storage business could get more promising in China as more players and competitors seek to get involved in China’s 14-million barrel per day refining industry, which requires increasing operation and cost flexibility.
Li Li will be speaking on the first day of Tank Storage Asia’s conference on September 27 about China’s crude importing and storage prospects as well as its strategic petroleum reserve plan. For more information visit www.tankstorageasia.com