PetroChina, Hengli buy crude in China's SPR auction

State-controlled PetroChina and private-sector refiner Hengli have bought 4.43mn bl of crude through the country's first auction of national strategic reserves today.

PetroChina bid for 950,000 bl of Qatar Marine and 1.1mn bl of Forties stored at Xingang port in Dalian, Liaoning province. It paid $65/bl for both grades, market sources told Argus.

Hengli took 1.79mn bl of Oman and 592,000 bl of Upper Zakum stored at Changxing island, Liaoning, at $65/bl and $70.50/bl respectively.

There was no deal for another 2.95mn bl of Murban on offer, market participants said. The results have not been confirmed by the National Oil Reserve Centre (Norc), which conducted the auction.

The winning bidders were the two refineries with the most access to the storage facilities, in line with expectations ahead of the auction. PetroChina's 410,000 b/d Dalian petrochemical refinery has around 16mn t/yr (320,000 b/d) of crude pipeline links with Xingang port's crude storage, while Hengli operates a 400,000 b/d refinery complex at Changxing island.

The auction was held by Norc, a body under the National Food and Strategic Reserves Administration (NFSRA). The crude was sold from bonded tanks in Dalian and can only be cleared through customs by companies with import quotas issued by the commerce ministry.

The 7.38mn bl of crude that was offered in today's auction was equivalent to only 2.2pc of China's monthly imports of 325mn bl, or 10.5mn b/d, in August. The market expects more crude to be offered in October-December, after the NFSRA said the auctions will be conducted in "batches and rotations".

China's first batch SPR crude auction
BatchGradeVolume (bl)StorageStored from
1-1Qatar Marine (API:32.37)951,137Dalian port, LiaoningApril 2020
1-2Forties Marine (API:40.70)1,095,565Dalian port, LiaoningAugust 2020
1-3Oman (API:33.20, 33.00)1,790,957Changxing island, LiaoningApril 2020
1-4Murban (API:40.60, 40.22)2,953,927Changxing island, LiaoningApril-May 2020
1-5Upper Zakum (API:33.80)592,031Changxing island, LiaoningMay 2020