Amid looming crises in its neighbourhood, from the Korean Peninsula to the Doklam Plateau in the Himalayas, China has been beefing up its strategic petroleum reserve (SPR). The sight of huge oil tankers offloading in China’s giant ports should come as no surprise. Earlier in August, the world’s largest active oil tanker, TI Europe, was spotted at China’s giant Ningbo port in the East China Sea. The humongous vessel can ferry 3 million barrels in a single shipment. That is nearly equal to the total daily production of the oil-rich Kuwait.
The TI Europe is among the four largest ships in the world, along with TI Africa, TI Asia, and TI Oceania. All these ultra-large crude carriers have been built by South Korea’s Daewoo Shipbuilding and Marine Engineering. Incidentally, TI Oceania, which was earlier called Hellespont Fairfax before it was purchased and modified by a Belgian owner, featured in Discovery Channel’s famous television show, Superships.
Ningbo, where TI Europe docked, has been China’s gateway to the world since the days of the Tang dynasty, which flourished between the seventh and 10th centuries. Then called Mingzhou, it was among China’s three major ports, the others being Guangzhou and Yangzhou. Ningbo was destined to emerge as a leading port in the world, when in 2006, it merged with the neighbouring port of the Zhoushan. Within six years, it became the world’s largest port in terms cargo tonnage, upstaging Shanghai for the first time. Today, the multi-purpose deep water port hosts a jaw-dropping 191 berths, which include 39 deep water channels. A separate oil terminal can handle large tankers. Besides, there are dedicated areas that take care of mineral ores and liquid chemicals.
Dependent on energy imports, China’s quest for building SPR capacity is understandable. Chinese fears, born out of geopolitical rivalry, are mainly centred on the Malacca Straits — the channel linking the Indian Ocean and the Pacific — through which vast volumes of global trade flow. Nearly 80% of China’s oil shipments travel through the Indian Ocean or the Strait of Malacca. Any disruption of the two-way movement of tankers and container shipping through this channel to Chinese ports would be catastrophic.
Malacca trap
Unsurprisingly, China has pursued the avoidance of what is called the “Malacca trap”. Its huge West-East pipeline system has been drawing Central Asian gas overland to the shore-based industrial hubs such as Shanghai, Guangzhou and Shenzhen. Ports such as Gwadar in Pakistan and Kyaukpyu in Myanmar have been arguably set up to avoid the tricky Malacca Straits.
There is no definitive word yet on the size of China’s strategic energy reserves. A Reuters report quoting China’s Commerce Ministry said that by the middle of 2016, China had 33.25 million tonnes of crude oil in its SPR inventory. But others, using satellite imagery and big data processing, estimate that the country’s capacity is much larger. The crisis in the Doklam plateau and the possibility of the standoff between Indian and Chinese troops drifting into open conflict has brought China’s energy security into sharp focus. According to some analysts, a China-India conflict could acquire a naval dimension, affecting China’s energy supplies.
“China is playing psychological warfare... but it should realise that even if it defeated India in a war on land, it would be impossible for the PLA navy to break India’s maritime containment,” Antony Wong Dong, a Macau-based military expert, was quoted as saying by the South China Morning Post.
