China’s private refiners and tank farm operators are expanding their storage capacity, which is expected to keep oil imports remain elevated through 2021. China’s oil storage sector has been typically dominated by the country’s strategic petroleum reserve (SPR) and state-owned companies. However, private firms have taken a bigger role after Beijing allowed independent refiners to import crude. These companies are expected to expand domestic crude storage capacity by 110 million to 140 million barrels this year.
Private refiner Hengli Petrochemical plans to double its storage space to 43 million barrels this year. Shandong Hongrun Group installed 22 100,000 cubic meter tanks in 2020 and will add another 28 in 2021. Shandong Hongrun is currently China’s largest crude storage operator with a total capacity of 82 million barrels. Yantai Port plans to expand its crude storage capacity by 7.6 million barrels by August 2021. Meanwhile, Qingdao Port expanded its crude storage capacity by 10 million in 2020 and plans another 3.8 million barrels next year.
China’s increasing crude storage capacity allowed the country to binge buy crude when prices fell. Analysts expect China’s oil imports to expand by 10% in 2020 and 6%-8% in 2021. Beijing has planned to grant more import quotas for private refiners next year. Tanker tracking data indicates China’s oil imports are on track to reach 339.5 million barrels in November, well above the 293.8 million barrels exported a year earlier.
