China to release first batch of 7.38 mil barrels from state reserves for Sept. 24 auction

China's National Food and Strategic Reserves Administration will release 7.38 million barrels of crude oil from its state reserves in the first set of auctions it plans to conduct Sept. 24, according to a statement posted on NFSRA's website late Sept. 14.

The barrels for auction include Qatar Marine, Forties, Oman, Murban and Upper Zakum in five lots, which were put into state reserve tanks in China's northeastern Liaoning province from April to August 2020.

The barrels are required to be used as feedstock for petrochemical production, and can only be used for the buyer's own consumption.

The auction is open to state-owned oil companies and integrated independent refineries.

Independent refineries keen to take part in the auction should have sufficient crude import quotas to buy these bonded crude barrels, according to the NFSRA statement. All participants will need to pay a Yuan 40/b ($6.21/b) refundable deposit to participate.

In China, refineries built by state-owned Sinopec, PetroChina, CNOOC and Sinochem are allowed to import crude oil without quota limits, but all other refiners need to abide by quotas to bring in imported barrels.

The auction for the five lots will be held on the National Reserve Crude Trading System between 9:00-11:30 and 13:30-15:00 Beijing Time Sept. 24.

Related government bodies will set the notional price which will be published on the system ahead of the auction's start.

The minimum increment is 50 cents/b.

Five lots of state reserve crude for auction:

Source: National Food and Strategic Reserves Administration