Baker Institute experts: Satellite data must crack ‘Great Wall of secrecy’ around China’s internal oil flows

David Ruth
713-348-6327
david@rice.edu

Jeff Falk
713-348-6775
jfalk@rice.edu

Baker Institute experts: Satellite data must crack ‘Great Wall of secrecy’ around China’s internal oil flows

HOUSTON – (Sept. 17, 2018) – A “Great Wall of secrecy” surrounds a crucial aspect of China’s internal oil industry, according to a new report by experts in the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. Comprehensive, high-frequency, reliable and publicly available data on China’s domestic oil flows and inventory movements are essentially inaccessible, they conclude. So the experts propose creating a forum to more systematically collect and analyze satellite data capable of shedding more light on the inner workings of China’s oil sector.

Credit: 123RF.com/Rice University

Gabriel Collins, the Baker Botts Fellow in Energy and Environmental Regulatory Affairs at the Baker Institute, and Shih Yu (Elsie) Hung, a research associate in the Center for Energy Studies, co-authored “Using Satellite Data to Crack the Great Wall of Secrecy Around China’s Internal Oil Flows.” The report not only outlines how such an approach would add value to analysis of global flows, but also explores the challenges it would face and how much it would cost.

“Ultimately, we hope that creating detailed, reliable and publicly available models of China’s internal oil flows can provide insights that improve energy and environmental policymaking at a global level — including work by Chinese scholars who would have access to a broad and deep level of data disclosure previously unavailable to them,” the authors wrote. “Perhaps greater transparency created by external governmental, NGO (nongovernmental organization) and academic researchers will eventually stimulate the Chinese government to improve its own oil sector data disclosures. Only time will tell, but the research potential of the satellite-based, open-source China oil data concept is substantial. Analytical dividends could flow for years from investment in the project by government agencies, academic institutions and private philanthropists interested in China-focused energy and environmental issues.”

China’s heft in the global crude oil market exerts profound effects across the energy sector, the environment and the well-being of humans, the authors said.

However, for on-the-ground primary commercial intelligence collection, such as that performed by Genscape and other independent analytical companies in the U.S. market, China’s oil sector is effectively a “denied area,” the authors said.

“This is not because the data themselves do not exist or aren’t being collected,” they wrote. “Rather, it is a challenge at its core rooted in the Chinese government’s obsession with secrecy and maximum control of information, and data costs. The prime purveyors of insights derived from satellite imagery are generally startups that must first answer to investors seeking returns and are thus often economically constrained from sharing data at a price point low enough to allow large-scale analysis of China’s energy sector by academic parties and various NGOs.”

The authors said specific oil storage data and other information that would improve analysts’ ability to ascertain flow patterns within China are not disclosed by the Chinese government in a regular and comprehensive fashion, leaving analysts to try and piece together numerous missing pieces of a very large and complex oil puzzle.

The forum the authors propose would provide imagery that can be fused with other data sources and cross-analyzed, with the aim of yielding a level of insight into China’s oil inventory and flow dynamics that would be exponentially deeper than the current general state of knowledge, they said.

“An open-source forum of academic, think tank and government participants would present an ideal channel for aggregating and analyzing the data in a systematic and useful manner,” they wrote. “It could leverage and build upon the formidable existing experience of the U.S. Energy Information Administration and the International Energy Agency, both of which already closely track oil sector activity in China as part of their analytical mandates. Neither entity has a proprietary interest in the oil markets, which enhances their ability to cooperate with academic and other participants whose core interests often center on publishing both analysis and the underlying data themselves.”

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For more information or to schedule an interview with Collins or Hung, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

Related materials:

Report: www.bakerinstitute.org/media/files/files/5b820dd5/bi-report-090718-ces-satellitechinaoil.pdf

Collins biography: www.bakerinstitute.org/experts/gabe-collins

Hung biography: www.bakerinstitute.org/experts/shih-yu-elsie-hung

Follow the Baker Institute Center for Energy Studies via Twitter @CES_Baker_Inst.

Follow the Baker Institute via Twitter @BakerInstitute.

Follow Rice News and Media Relations via Twitter @RiceUNews.

Founded in 1993, Rice University’s Baker Institute ranks among the top three university-affiliated think tanks in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blogs.chron.com/bakerblog.