Oil reserves - a weapon that helps China 'show prestige' over the US 3
The proposal to open a strategic oil reserve to reduce oil prices and stimulate economic recovery was made by US President Joe Biden during an online summit with Chinese President Xi Jinping last week.
The US is said to have the world’s largest strategic oil reserves, while China, as the world’s largest crude oil importer, has also built up a significant reserve of its own.
In the 1990s, China announced plans to establish a strategic petroleum reserve system like the United States.
Oil storage tank of Sinopec factory in Hefei, Anhui province in 2009. Photo: Reuters.
The project comes at a time when China is aggressively seeking global resources, purchasing crude oil from areas such as Sudan, Iraq and Venezuela, or iron ore from Australia and Brazil, to support growth.
After 14 years, China’s dependence on imported oil has increased significantly, largely because the country is the world’s factory and because more people own private cars.
In 2020, China imported 73% of the oil it consumed, compared to 49% in 2007. As the world’s largest crude oil importer, China bought 542 million tons (4.06 billion barrels)
According to the plan, the oil warehouse of China’s National Strategic Petroleum Reserve will have a total capacity of 70 million cubic meters, creating a backup supply equivalent to 100 days of imports.
The first phase of the project is to develop warehouses with a storage capacity of 16.4 million cubic meters at four coastal facilities, including Dalian in Liaoning province, Huangdao district in Qingdao in Shandong province,
The warehouses for this phase have been completed and reports of a second phase have begun to appear in Chinese state media, although they have not been confirmed.
The Chinese government has expanded storage facilities in Huangdao and Zhoushan, and built new facilities in Dushanzi city in Xinjiang, Lanzhou in Gansu province and the port city of Tianjin.
China does not regularly announce the size of its crude oil reserves, but in 2018, the National Bureau of Statistics said national oil reserves, including some corporate storage, totaled
However, the country is believed to have stockpiled a significant amount of crude oil when oil prices collapsed in March and April last year.
Wang Yongzhong, an energy researcher from the Chinese Academy of Social Sciences, estimates that China’s crude oil reserves are equivalent to about 40-50 days of imports, still much lower than the 90-day criterion set by the Administration.
Meanwhile, the US established the Strategic Petroleum Reserve (SPR) in 1975 and now has about 600 million barrels in stock, enough to meet the country’s needs for more than a month.
The issue of energy and mineral security was discussed during the recent 6th Central Conference of the Communist Party of China, just a few days after the US-China online summit.
At the end of September, China’s National Strategic Oil Reserve Center opened the first public sale of reserve oil to regulate the domestic market, with 7.38 million barrels released from the Dalian facility.
In that context, Chinese scholars believe that President Biden’s call to release oil inventories shows that he is struggling to respond to political pressures from increased gasoline prices and realize his promise to bring
US gasoline prices recently increased by an average of nearly 1 USD/liter, 60% higher than a year ago.
`Rising oil prices is a problem that the US considers serious and they cannot solve it on their own. Currently, this is a dilemma in which the US has no other choice but to cooperate with China,`
Global Times, a newspaper belonging to People’s Daily, the mouthpiece of the Chinese Communist Party, today published an editorial saying that President Biden’s Democratic Party is facing difficulties before the midterm congressional elections in 2022,
`As a result, the Biden administration will have to turn to China. That is a direction that benefits everyone, but clearly shows China’s superiority,` Global Times commented.
This newspaper the day before also published an article saying that China could `be kind` to the US by opening its strategic oil reserve, but it would do so based on the country’s economic needs, instead of
President Biden announced on November 23 that the US Department of Energy would release 50 million barrels of oil from the SPR to lower gasoline prices for Americans and resolve the gap between supply and demand, according to an announcement from the White House.
The announcement also noted that the US will discharge oil storage in parallel with other large energy consuming countries such as China, India, Japan, South Korea and the UK.
However, China did not appear enthusiastic about this proposal.
At today’s press conference in Beijing, Chinese Foreign Ministry spokesman Zhao Lijian announced that the country `will organize the release of crude oil from its strategic reserve according to its actual needs`, but refused.
US President Joe Biden (left) during a meeting with Chinese President Xi Jinping (on the right screen) on November 16.
Lu Xiang, an expert on US studies, said that China could eventually release its oil reserves, but the scale would be very limited because the country is not a major oil exporter and only has crude oil reserves.
`This is an aspect where China and the US can cooperate, because the decline in global crude oil prices also benefits China as a major crude oil importer. What should China prioritize? Benefits
Chinese experts also believe that through this case, Washington should change its `confrontational` attitude towards Beijing or any other country, because they are the country looking for help.
`China has responsibility for global issues such as reducing carbon emissions and stabilizing commodity prices, but the US also needs to face its responsibilities by not trampling on the interests of other countries,` Global Times
