China to hold first state crude oil reserves auction on September 24

7.38mln bbl for sale on National Oil Reserve Centre platform

  
Photo used for illustrative purpose only. China National Offshore Oil Corporation's (CNOOC) oil storage facilities in Zhanjiang, south China's Guangdong province are seen in this picture taken in 2004.

Photo used for illustrative purpose only. China National Offshore Oil Corporation's (CNOOC) oil storage facilities in Zhanjiang, south China's Guangdong province are seen in this picture taken in 2004.

REUTERS/China Newsphoto SUN/JK

BEIJING- China's state reserves administration said on Tuesday it would auction around 7.38 million barrels of bonded crude oil, mostly from the Middle East, on Sept. 24, marking the first round of sales in a rare release of strategic inventories.

The National Food and Strategic Reserves Administration last week said it would release oil reserves to the market in phases to help stabilise prices, in its first ever public auctions of crude oil. 

The volumes on offer in the first auction, which will be held on a National Oil Reserve Centre platform, were broken down into five crude oil grades.

Some 2.95 million barrels of Abu Dhabi's Murban is up for grabs, along with barrels of the emirate's Upper Zakum grade, Qatar Marine, Oman crude and Forties Blend from the North Sea, details provided by the administration showed.

All of the oil is currently being stored in bonded warehouses in the port city of Dalian, in northeast China's Liaoning province.

China, the world's biggest importer of crude oil and most other major commodities, has been taking various steps to try to tame rising commodity prices this year, including selling off strategic metal stockpiles for the first time in over a decade.

Benchmark Brent crude  up around 43% so far this year at around $74 per barrel as demand bounces back from the coronavirus-driven collapse in 2020.

Bidders must comply with national refining industry policy and have sufficient import quotas to take the bonded crude, the administration said in its notice, adding that the oil should be used for the production of chemicals.

The administration said last week the release was mainly for integrated refining and chemical plants.

Potential bidders should deposit a trading margin - set at 40 yuan ($6.21) per barrel - to a designated account by 5 p.m. Beijing time (0900 GMT) on Sept. 22, the administration said. There will be a mock bidding session the following day before the real auction on Sept. 24.

No transaction fee will be levied on any sales, the notice said, adding that volumes purchased at auction were not for resale.

($1 = 6.4380 Chinese yuan renminbi)

(Reporting by Muyu Xu, Tom Daly and Beijing Newsroom; editing by Jason Neely and Pravin Char) ((tom.daly@thomsonreuters.com; +86 10 5669 2119;))


More From Markets