"Three countries have publicly expressed plans to build and fill SPR’s - China, Russia and India. These SPR's will be filled in addition to those that already exist in the 26 member IEA. A look at the numbers to fill the proposed Strategic Reserves in any reasonable time frame shows that this act of filling the reserves will be a significant demand on world oil production.
First, a background note on Strategic Petroleum Reserves worldwide is presented here. The EIA states that the US has 50% of the world’s Strategic Reserves of oil at approximately 700 million barrels. This would leave about 700 million barrels for the rest of the world - currently the 25 other nations (besides the US) of the IEA, including the European Union, Japan, South Korea and Canada. See: www.simmonsco-intl.com/files/020603.pdf Note however, that there is evidence that certain countries may have far more Strategic Reserves than the EIA’s estimate. For example, an article in the China Daily asserts that Japan has Strategic Reserves for 169 days of domestic consumption - which would amount to 980 million barrels at current consumption rates. See: en.ce.cn/Insight/t20040520_887246.shtml
Note also, other countries, including the US (possible plans to increase the SPR by an additional 300 million barrels), Australia, Asia and the EU may be drawing up plans to increase the size of their SPR’s.
Putting aside planned increased to SPR's in countries with existing SPR's for now, this analysis will go through the numbers on the planned increases in China, India and Russia:
India has stated that they have targeted a SPR of 40 million barrels initially. see: www.gasandoil.com/goc/news/nts43834.htm At a fill rate of 100,000 barrels per day (bpd) -- the same rate that the US used from Nov 2001 onward for its SPR -- this would require 400 days to achieve.
China has stated that they want a SR of 100 million barrels. At a fill rate of 100,000 bpd, this would require 1000 days - over 2.5 years. At 100 million barrels, the SPR would only supply China’s petroleum needs for 20 days. A fill rate of 200,000 bpd would require 1.25 years to fill 100 million barrels.
Russia, (to the author’s knowledge), has not stated the size of their reserves, but at a daily consumption of oil of 2.6 million bpd, a SPR sufficient for a 30 day consumption would equal 78 million barrels. At a rate of 100,000 bpd, this would require 2.1 years to achieve.
Note that once a country commits to build facilities for Strategic Petroleum Reserves, it does not make economic sense to keep them empty. Strategic Petroleum Reserves are kept in very large tankers (for example, as in Japan and in China) or underground storage tanks, which are both expensive to maintain - although underground storage facilities are significantly less expensive to maintain. Cost estimates per barrel of stored oil average $3.00 in Japan and $1.60 in the European Union, and $0.20 for the US - (demonstrating the clear cost benefit of underground storage, if it is feasible) (it is unclear whether these costs are one-time or annual). reference: www.nist.gov/public_affairs/baldrige_2005/dynmcdermott.htm
The desire to have large reserves, particularly in Asian countries stems not only from the ability to “cushion” impacts of temporary shortages, made more severe by a lack of domestic oil production, but also a desire to influence the price of oil. See: www.chinadaily.com.cn/english/doc/2004-08/11/content_364104.htm
The increase planned SRP’s worldwide may also be related to the increase in US dollar reserves worldwide. Economist Brad Setser estimates that increases worldwide in reserves of US dollars may have hit $700Bn this year. See: www.rgemonitor.com/blog/setser/108356/ China has stated that it may use its US dollar reserves to buy oil for its strategic reserve: www.dailytimes.com.pk/default.asp?page=story_15-3-2005_pg5_19
The cost of the facilities, the increase in US dollar reserves, and the economic/political desire of having sizable SPR’s mean that the plans will very likely go through in the coming years.
All in all, it appears that oil demand will be increased by 300,000 bpd --if India, China and Russia fill at 100,000 bpd respectively -- to as high as 1,000,000 – if India, China and Russia fill at 200,000 bpd and the US, the EU and other Africa, Latin America fill at 100,000 barrels per day. Or possibly the numbers can go higher, if other countries, such as African or other Latin American countries, decide to build and fill SPR's, or, alternatively (or at the same time) the EIA countries decide to increase the size of their SPR's. These demand numbers to fill SPR’s worldwide are not insignificant in a tight oil market.