The Chinese province of Shandong, the country's oil refining powerhouse, is set to increase its crude storage capacity by the end of 2020 to capture cheap oil, industry sources said. The expansion will add the current capacity of about 300 million barrels by another 10.26 million cubic meters (64.54 million barrels).
Two new storage facilities have already come online. These tanks are Sinopec's 1.6 million cubic meters (10.06 million barrels) tanks at Dongjiakou port in March and Baogang International's 1.16 million cubic meters (7.29 million barrels) tanks at Dongying port in April. The remaining 7.5 million cubic meters (47.17 million barrels) is mostly concentrated in Dongjiakou port and expected to enter service as early as July.
Shandong is home to 80% of China's small independent refiners, but they suffered from limited storage capacity. Hence, they cut runs to as low as 40% in February and March amid the coronavirus epidemic. They have raised their runs to 73.5% in April, but storage remains tight as they also increase imports. Satellite data from Ursa showed all Shandong crude stocks, including commercial stocks and strategic reserves, reached around 163.71 million barrels by end-April.
