Wednesday June 28, 2006

China and Saudi Arabia: interesting SPR team up?

peakoil.com -> marketwatch.com :

China and Saudi Arabia are reportedly discussing an agreement to import oil from Saudi Arabia to fill China's strategic oil reserves. The goal is to have about 800 million barrels in the reserve, said Phil Flynn, a senior analyst at Alaron Trading, who cited comments from China's Finance Minister Jin Renqing last year. That would be larger than the strategic petroleum reserve in the United States, the biggest stockpile of government-owned emergency crude, which can hold as much as 727 million barrels.

Filling it may cause a climb in oil prices because it'll draw from market inventories. At the same time, it could prompt a price decline since a reserve would also offer a cushion in case of supply disruptions. Either way, it may take time for an SPR in China to influence prices, given that the first of the oil reserve facilities isn't expected to start operation until at least the end of this year.

See also :

1. China's first strategic oil reserve facility to be ready in August
2. ASEAN, China, Japan, South Korea mull oil stockpile

(2006-06-28 09:14:16 SGT) [Energy] Permalink

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