China imported about 12.4 million barrels of crude for its strategic storage tanks in December, more than 50 percent its November intake, taking advantage of cheaper oil, industry sources said on Monday.
State oil giant Sinopec, the key importer of the crude supply, has doubled its tank space lease at the Zhenhai reserve base to 20 million barrels, one industry source told Reuters.
The new imports suggest that at least 70 percent of the tanks designated for strategic storage has been filled.
Another industry source based in the east coast city of Ningbo, where the tanks are situated, said: "At least eight crude tankers have discharged into the government storage in December."
Sinopec's move to double its tankage lease stokes market concerns that China is operating its reserve tanks in a way different from the industrialised nations under the supervision of the International Energy Agency (IEA), which calls for stock draw only for emergencies.
"It looks like they are doing a combination, in part they are using it (strategic reserve tanks) for emergency stocks and marking up opportunities for trade, we can't know for sure but the possibility is certainly there," said Victor Shum, senior principal at Purvin & Gertz in Singapore.
The lease by the state refiner, which runs the country's refining hub in the booming east coast, and linked by pipelines to the Zhenhai base, would allow the firm to draw on stocks liberally.
Industry sources told Reuters in November that Sinopec had secured a deal to use 10 million barrels of storage on the east coast and was in talks to double that. Terms of the lease, such as cost and duration, were unclear.
IEA's chief said last week the agency did not expect China to make a firm commitment to use its strategic oil stockpile only in case of shortages.
Top energy policy maker Zhang Guobao said in December that reserves would only be used in supply emergencies but China has not made a formal commitment to this approach.
"It is among the things we have still to clarify," said Claude Mandil, IEA's Executive Director, told Reuters on Thursday ahead of his visit to China.
A total of about 3.34 million tonnes (24.38 million barrels) of crude oil was discharged at Ningbo port in December, a survey of port agents showed. Ningbo, where the Zhenhai reserve base is located, is the country's top oil transfer hub.
China's top energy official has said in November, China wants to fill its strategic oil reserves when global crude prices are relatively low.
China's first fill into Zhenhai in August appeared ill-timed as crude peaked at above $78 a barrel in mid-July. But the recent moves seemed savvier as US crude hovered around $60 for much of December, and slid to $51.56 last week, the lowest since late-May 2005.
"This signals that as long as oil prices remain weak, they will continue to aggressively buy, as long as oil prices remain below $60," said Gordan Kwan of CLSA in Hong Kong.
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