China apos;s Oil Buying Binge To Run On In 2021 As Tank Operators ...

By Chen Aizhu, Muyu Xu and Gavin Maguire

SINGAPORE/BEIJING, Nov 18 (Reuters) - China's commercial oil stockpiling sector, which emerged as a key swing buyer of crude as prices plunged earlier this year, is setting plans to grow again in 2021, supporting a further boost in imports.

Private tank farm operators, refiners and traders pumped an extra 310-600 million barrels of oil into storage in China this year, according to a survey of five analysts, more than a month's usage in the world's second-largest oil consumer.

The buying helped prop up global oil markets as the coronavirus slashed demand, and delivered big profits for operators, traders and refiners who were able to stock up cheaply.

While oil prices have partly recovered, they remain below historical levels.

"Given how lucrative the storage business is in 2020, everyone will try to boost their storage capacity," said Liu Yuntao, China analyst with Energy Aspects.

Private refiners and storage operators will put about another 100 million barrels of new tanks to use in 2021, according to interviews with six top storage operators and data from company and Chinese media reports.

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With Chinese demand kynghidongduong.vn a key factor for crude markets -- along with output curbs by major producers and how quickly global fuel demand can recover from the pandemic -- more storage can potentially boost flows into the country.

PRIVATE PLAYERS LEAD

China's oil storage has traditionally been driven by state-owned companies and the country's Strategic Petroleum Reserve (SPR), but private firms have taken an increasing role over the past four years after small, independent refiners were allowed to import oil.

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Private refiners, storage firms and port authorities accounted for nearly half of this year's inventory build, analysts said.

"Non-state storage build has become a bright spot this year, and the trend will continue as the government lowers thresholds for private firms to participate," said Chen Lin, a senior manager at Jinggu Energy, a private storage operator based in east China's oil hub Zhoushan.

As well as chasing arbitrage opportunities, tanks can be leased out to refiners and traders, helping to smooth the supply chain inside China after heavy congestion at some key ports this year delayed tanker unloading, said analysts.

The planned new tank builds for 2021 compare with expanded tank space of about 110 to 140 million barrels this year, according to SIA Energy and Energy Aspects.

The new tank space is concentrated in China's eastern refining hubs in Shandong and Zhejiang, and in northeastern Liaoning.

Independent refiners Hengli Petrochemical and Shandong Hongrun Group, commodity trader Shandong Huaxin Industry & Trade Group and port operators at Qingdao, Rizhao and Zhoushan on the east coast have emerged as the key players in China's commercial storage sector.

Satellite images comparing 2020's storage footprint at key locations to the same site in 2018 show how sharply tank capacity has increased.

Hengli Petrochemical more than doubled its storage space in 2020 to 43 million barrels, while Shandong Hongrun Group is currently China's single largest storage operator with nearly 82 million barrels of space, mostly in Weifang, Shandong.

Shandong Hongrun, which counts global traders Vitol, Mercuria and BP as clients, added 22 100,000 cubic meter tanks this year, and plans to add another 28 next year, totalling 17.6 million barrels, a company official told Reuters.

Yantai port expects to build an additional 7.6 million barrels of storage by August next year, trương gia giới while Qingdao port is planning an additional 3.8 million barrels after building 10 million this year.

Overall, China's crude oil imports are expected to grow 6%-8% in 2021, following 10% growth in the first 10 months of 2020, to near 12 million barrels per day, according to Energy Aspects' Liu and Paola Rodriguez-Masiu at consultancy Rystad.

Beijing has boosted quotas for non-state buyers and purchases will also be underpinned by new refining units added by firms like privately-controlled Zhejiang Petrochemical Corp and Shenghong Petrochemical Corp, as well as expansions at Sinopec Corp plants.

Oil shipment data tracked by Refinitiv shows China is on course to import 339.5 million barrels of crude oil in November, which would mark a new record.

That compares to 293.1 million in October and 293.8 million in November 2019, the data showed.

(Reporting by Chen Aizhu and Gavin Maguire in Singapore and Muyu Xu in Beijing; Editing by Richard Pullin)