State-owned China National Offshore Oil Corporation (CNOOC), a major importer of Russian oil, has been actively accumulating shipments of ESPO blend crude from Russia’s Far East into a newly established reserve base in recent months, as reported by traders and tanker trackers. This marks the first instance of stockpiling Russian ESPO blend crude at CNOOC’s new reserve base, with the stockbuild estimated at over 10 million barrels by tanker tracker Vortexa Analytics. The significant increase in China’s seaborne imports of the flagship Russian export grade in March, aided by this stockbuild, has bolstered ESPO blend prices despite subdued demand from independent Chinese refiners.
The surge in ESPO discharges into Dongying, east China, commenced following the utilization of three new berths capable of accommodating Aframax vessels at the port. Each ESPO cargo, typically transported in Aframax-sized tankers, amounts to about 100,000 metric tons or 740,000 barrels. While the precise utilization of the 10 million barrels remains unspecified, two senior traders knowledgeable about ESPO flows indicated that China has been augmenting its emergency stockpile, aligning with the government’s emphasis on bolstering energy security.
China, the world’s largest crude oil purchaser, maintains a tight veil over information concerning its emergency government stockpile, with varying private estimates of its strategic reserve levels. Vortexa estimates China’s strategic reserve at 280 million barrels, while consultancy Energy Aspects places it at 400 million barrels. In comparison, the U.S. Strategic Petroleum Reserve stands at approximately 364 million barrels.
The influx of Russian oil into China, including via pipelines under long-term contracts, surged by a quarter last year to a record 2.14 million barrels per day, solidifying Moscow’s position as China’s leading oil supplier for the second consecutive year, surpassing former top provider Saudi Arabia.