China has started building new strategic reserves for crude oil, providing a boost to global oil demand and potential support for prices, as new supplies from both within and outside Opec-plus are hitting the market.
Industry sources told Energy Intelligence that details of total new capacity and locations are unclear so far, but most are expected to be underground caverns, as was the case for a planned third phase of strategic reserve sites in the late 2010s that was never built.
In 2026, in Zhoushan, south of Shanghai, an underground cavern operated by China National Offshore Oil Corp. (CNOOC) and capable of holding 20 million barrels of crude oil will be completed, a Chinese expert told Energy Intelligence, adding that this would be a dedicated strategic reserve site.
Another well-placed source said that a total 200 million bbl of strategic petroleum reserve capacity would come on line in 2026, while traders cited unconfirmed reports of much higher capacities.
Beijing’s decision to launch, and apparently to finance, new reserves sites speaks to China’s growing obsession with energy security at a time of growing geopolitical tensions.
