Top state refiners Sinopec Corp, PetroChina and leading private chemical giants like Hengli Petrochemical 600346.SS and Zhejiang Petrochemical Corp are set to join the country’s first state oil reserve auction on Friday, company and trading sources said.
China, the world’s second-largest oil consumer, is set to auction for the first time state crude oil reserve on Friday in an attempt to test a new mechanism to manage its large emergency stockpile and tame domestic inflation.
A total of 7.4 million barrels of crude stored in bonded tanks in northeast China’s Dalian port is up for grabs. The grades include Abu Dhabi’s Murban and Upper Zakum, Qatar Marine, Oman crude and Forties Blend from the North Sea.
“We’ve registered …. Logistically Hengli has the advantage as our plant is connected to some tanks designated for the reserve sale,” said a spokesperson for privately-controlled Hengli Petrochemical.
Other refiners that can receive oil from Dalian port by pipeline include Zhenhua Oil, Bora Petrochemical, Jinyuan Petrochemical and Panjin Haoye, traders said.
Privately-controlled Shandong Hongrun Petrochemical, in which state-run Sinochem has a stake, is also joining the sale, said a company source, who declined to be named as he’s not authorized to speak to media.
Participants are required to put in a deposit of $40 a barrel by 5 p.m. Beijing time (0900 GMT) on Wednesday and have sufficient crude oil import quotas, the reserve agency has said.
The sale will be held on the newly established National Oil Reserve Centre platform in two sessions starting at 9 a.m., and ends at 3 p.m. on Friday.
Winners should lift the oil within 60 days after signing the sales contract, the reserve bureau has said.c
Source: Reuters (Reporting by Chen Aizhu and Florence Tan Editing by Mark Potter)