China's secrecy over oil demand, stock data a hurdle to energy security: IEA
London (Platts)--19Feb2013/1236 pm EST/1736 GMT
The International Energy Agency remains largely in the dark over the
real pace of China's surging oil demand despite long-running attempts to
persuade the county to publish official data on consumption and oil stocks,
the IEA's top energy security official said Tuesday.
China continues to turn down requests for information on its oil demand
and stock levels in particular, as the country believes it is in its best
interest to keep data on sales and releases from its growing strategic
petroleum reserves a secret, Keisuke Sadamori told an oil conference in
"There are a lot of fundamental problems in working with China, they are
unwilling to be open...especially in the area of energy security and oil
stockpiling," Sadamori said told participants at an International Petroleum
Non-IEA member China will continue to make the biggest contribution to
the growth in global energy over the next 30 years and is set to overtake the
US as the world's biggest oil consumer before 2030, according to the IEA.
Currently the world's number two oil importer, China is also widely
expected to overtake the US as the world's biggest importer of oil within the
next three years.
LACK OF DATA
The IEA, like other market watchers, relies on third-party sources and
internal estimates of China's demand and stockpiles of crude and products to
underpin its own demand forecasts.
"We are suffering from a lack of data...it's a major challenge and its
something we need to work on," Sadamori said. "We would like better
understanding and be more convinced that they are willing to work with us. I
think it will obviously take time."
China's strategic petroleum reserves are set become the world's second
largest by size, behind the US, after a major project to expand the
stockpiles is completed in 2020.
Beijing ordered the phased construction of stock capacity in 2005 and
country plans to boost its stock capacity to around 500 million barrels by
2020. The goal would bring China in line with mandates applied to IEA member
states, which must maintain their oil stocks to cover 90 days of net imports.
In 2012, China helped support oil prices when it began pumping over 100
million of barrels of crude into its new emergency reserve, according to the
By November, the IEA's data suggested that its stockpiling activity had
ended but market interest over China's pace of stock building has remained
strong ever since.
China currently has an estimated stock capacity of around 140 million
barrels of crude and product, which is sufficient to cover about 24 days of
net imports, Sadamori said.
As China is still in the early stages of building up its strategic
reserves, a recent run-up in fuel prices could delay the further expansion to
the planned 2020 capacity, he said.
The IEA last week said it had revised the way it calculates China's oil
demand to take into account reported company inventory data in its
methodology for the first time.
Previously, the IEA calculated apparent demand as the sum of China's
refinery output and net oil product imports.
But due to China's fast-growing refining capacity, there was a need to
account for changes in oil stocks held by Chinese companies as any changes in
inventory volumes could be significant, the IEA in its latest monthly oil
China does not publish actual consumption data and analysts typically
come up with measures based on available data to estimate apparent oil demand.
"We are all guessing on Chinese demand," Sadamori said. "We think that
we have come up with a better formula for guessing Chinese demand."
The changes to the IEA's methodology had no impact on its estimates of
China's demand last year but redistributed consumption data across the year,
increasing Q2 and Q3 demand at the expense of the first and fourth quarters.
The IEA estimates that China's oil demand will grow by 4%, or 385,000
b/d, this year to 9.98 million b/d, after growing by a similar rate in 2012.
Describing the Paris-based IEA as the "gatekeeper" for international
energy security, Sadamori said the IEA also remains in talks with China to
organize an exercise to test the capability of the country's stockpiles to
cope with a severe disruption to imports.
But he said there still "seems a long way to go" in getting China to
agree to participate in a regional stock release test that it calls an
Emergency Response Exercise.
The IEA's Emergency Response Exercises are designed to improve
understanding of how to assess supply disruptions and knowledge of IEA
emergency response tools.
Sadamori said the IEA is also "frustrated" over the lack of a clear
decision-making structure on energy issues within China's governmental
bodies, which can often suffer from a lack of funding or clear chain of
--Robert Perkins, firstname.lastname@example.org
--Edited by Jonathan Fox, email@example.com
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