Amid low global prices, Chinese oil refiners have been importing record quantities of crude in the first few months of 2016. So much so that the port of Qingdao, which handles a third of China’s oil imports, is struggling to cope.
Gigantic oil tankers line up up outside Qingdao for days. Most of them are the so-called VLCCs – Very Large Crude Carriers – with a maximum capacity of 2 to 3 million barrels of oil.
“Since January, we have doubled the workload of pipelines, and raised the efficiency of road and railway transport, ” Liu Jin, General Manager at the Qingdao Shihua Crude Oil Terminal said.
Even so, the port has been working at full capacity for months, a workload it has never seen before.
It takes nearly two good days to offload a fully loaded VLCC, though the company says they’ve managed to make it 30 percent faster.
The port of Qingdao is importing oil at an unprecedented speed of 2.5 million barrels per day, up by nearly 80 percent, compared to the same period last year. This has raised global speculation of the reasons behind China’s buying frenzy.
Most of this oil has gone to 23 independent refineries, for which the Chinese government lifted a ban on oil imports in November. Before that, the only importers were the three state-owned oil enterprises: CNPC, Sinopec and CNOOC.
With two thirds of its oil supplies coming from abroad, China’s strategic oil reserve can only last 40 days, far below the international standard of 90.
While the country is quickly buying oil, some experts say it is more of a positive factor for the global economic recovery. Liu Baocheng of the University of International Business and Economics feels the situation is very different than just five years ago.
“The oil supply is more ample. There is continuous discovery of oil fields, and the U.S. is using more shale oil and gas. So the whole world, particularly the U.S., do not even take China as a rival, but as a savior,” Baocheng said.
But for the port of Qingdao, the most crucial issue is to deal with congestion. With another 83 gigantic oil tankers reportedly bound for Qingdao, the port says it will take at least another month before the congestion starts to ease.
Source: CCTV America