Sinopec to Open Zhanjiang Oil Tanks; SPR Site Delayed

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Posted by Joseph Keefe

Commercial crude storage of 8.5 mln bbls due start by
June; Sinopec also building a rock cavern strategic reserve base
nearby
.

Sinopec Corp is expected to start operating by June a new
commercial crude oil tank farm in the southern Chinese city of
Zhanjiang, where a large strategic reserve site is also under
construction, three industry sources said this week.

The new commercial tanks will store 8.5 million barrels,
equivalent to over four supertankers.

The tank farm consists of twelve tanks of 100,000 cubic metres
each and three tanks of 50,000 cubic metres in Zhanjiang in
Guangdong province, according to three industry sources with
knowledge of the facility.

Sinopec is applying with customs authorities to qualify the
facility as a tax-bond site before the start of operations, said
one of the sources.

Meanwhile, in the mountainous outskirts of Zhanjiang, Chinese
engineers are digging the rock caverns to build a national
strategic reserve site able to store about 31.5 million barrels
of crude oil, two of the sources said.

The reserve project, located in Lianjiang county of Zhanjiang
city is expected to start operating in early 2018, the sources
said, nearly two years behind an earlier timeline estimated by
market analysts.

This would be China's second rock cavern oil reserve after one
started up in eastern Shandong province before mid-2015.

Sinopec engineers are the builders and the state refiner was
expected also to manage it on behalf of the government when it
comes on line, industry officials have said.

"For the rock caverns, you'll need more time for geological
survey and designs, and more safety measures," said one of the
sources.

The sources declined to be named as they are not authorized to
speak to press.

A Sinopec spokesperson said the company does not comment on
operational matters.

Sinopec currently operates the Dongxing refinery of 100,000
barrels per day (bpd) in Zhanjiang and a 360,000 bpd refinery in
nearby Maoming city. Both plants will be connected with the new
commercial storage by pipelines, the sources with knowledge of
the commercial storage site said.

The refiner has also started in December building a large
greenfield plant at Donghai Island, about 10 km from the port of
Zhanjiang, that includes a 200,000 bpd refinery and an 800,000
tonne-per-year ethylene complex.

As part of the new investment, Sinopec is expected to add a new
crude tank farm and a crude import terminal that can handle
vessels up to 300,000 deadweight tonnes (dwt).

Sinopec currently operates two terminals with the Zhanjiang port
authority that can receive 300,000-dwt crude oil tankers, the
sources said.

Reporting by Chen Aizhu

Mar 2, 2017

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