State-owned China National Offshore Oil Co (CNOOC) has started to build up a reserve of Russian ESPO crude for the first time.
Traders and tanker trackers told Reuters some shipments brought in on vessels in recent months have been diverted to a new storage base.
The reserve has been estimated at more than 10m barrels already by consultancy Vortexa Analytics.
This helped lift China’s imports of the crude grade to a record high in March.
The move emphasises China as the biggest destination for Russian exports in the face of Western sanctions.
CNOOC began storing crude in November at the 31.5m-barrel facility it has built at Dongying port, sources said.
The company has not commented.
“ESPO discharges into Dongying began surging … after the port put into use three new berths able to dock aframax vessels,” said Emma Li, Vortexa’s senior China oil analyst. Each cargo is about 740,000 barrels.
Traders said the move is part of a government drive to boost energy security.
Strategic oil reserves
Vortexa put China’s strategic reserve levels at 280m barrels, while consultancy Energy Aspects estimated 400m barrels.
The US Strategic Petroleum Reserve stands at about 364m barrels.
Around 29m barrels of ESPO were discharged from tankers at Dongying between November and March.
Independent refiners bought 19m barrels.
China processes 15m barrels of crude per day, so the stored amount is modest so far.
Reuters said the storage base cost $885m.
Before last November, the site was used largely to store CNOOC’s offshore crude and fuel oil, according to Li.
“Lower demand from India prompted more Russian oil sales to China as really there are not many countries that can take Russian oil now,” an ESPO dealer said.
