China offered to tap US oil reserves for relief

By Rolke and Hui (CNN) — China has offered to transfer billions of dollars of oil reserves to the United States in exchange for the release of crude oil from the country’s strategic petroleum reserve, according to a report by the South China Morning Post.

The practice dates back to 1998. During that year, Beijing agreed to release 60 million barrels of crude oil to help ease the global oil crisis. The oil was initially stored in the Strategic Petroleum Reserve in Texas.

Today, Beijing has nearly 1.6 billion barrels of reserves — or about a third of the United States’ total reserves — enough to meet the entire nation’s demand for 21 months, according to US Energy Information Administration data.

China’s plans to tap its petroleum reserve was called off after Washington requested a review and the foreign ministry expressed concern over the implications. The state-run oil company Sinopec did not respond to a request for comment.

Rolke and Hui reported that a meeting between Chinese Vice Premier Wang Yang and US Treasury Secretary Steven Mnuchin last month was aimed at setting up the transfer.

In October 2017, then-US Treasury Secretary Jack Lew included China and India in his policy paper for financing that aimed to encourage responsible foreign investment and boost bilateral trade.

“Asian buyers of US crude oil are also seeking to build their financial capabilities with China as a commercial partner,” Lew wrote, adding that the framework could enhance the stability of global energy markets.

While a detailed proposal for how to share oil could not be released, US Energy Secretary Rick Perry said that “there are certain principles that we would wish to move forward.”

“In particular, that means you look at whether there are any implications in terms of the commercial relationship that would come with the question of oil purchase from your Chinese or other Asian customers,” he said.

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