China's huge strategic petroleum reserve as a geoeconomic tool

Serious stuff! Much has been written about the US Strategic Petroleum Reserve over many years, but fairly little about the Chinese counterpart.

I have recently blogged here how China has apparently dampened global crude oil prices as the war against Iran was going on.

Unfortunately, these RAND authors also omitted to mention that China has built hundreds of coal fired power plants over the past 10-15 years or so. "Total Capacity: China accounts for over half of the world's total operating coal power capacity, sitting at roughly 1,271 GW" (Google Search). Thus, these authors like many other Western observers believe in the myth of or have a huge blindspot regarding the China energy transition that ought to be emulated in the West.

"China’s Strategic Petroleum Reserve (SPR) was established in March 2004, with the aim of constructing China’s first oil base to protect the country’s energy security. Since then, China’s SPR has evolved from a small coastal network into a nationwide system of large-scale storage facilities combining central government, commercial and provincial reserves.

While the Chinese SPR is primarily designed to mitigate risks from oil supply chain disruptions, its size compared to that of other countries could give China a large potential leverage on international energy markets and, by extension, in the global economy. ...

Key Takeaways

• China’s SPR has grown into a substantial and increasingly sophisticated system, with a capacity rivalling the world’s largest oil importers and backed by a recently strengthened legal and institutional framework.
• RAND researchers participating in a workshop identified the baseline scenario – strategic caution – as the most likely, with China prioritising energy security, domestic resilience and stability through conservative, sparing SPR releases.
• At the same time, experts viewed the precision relief scenario, where SPR resources are selectively released to specific provinces or sectors facing acute shortages, as highly realistic.
• Looking ahead, the panel noted that China’s ongoing energy transition [???] – with increased electrification, renewables and nuclear power – may diminish its dependence on oil over the course of the next two decades. This shift could allow Beijing to use the SPR more assertively for diplomatic or geoeconomic gains, especially in crises or when cultivating strategic relationships.

..."

China's strategic petroleum reserve as a geoeconomic tool: A 'what if' exercise | RAND