China's four strategic oil reserves to be operational by year end

19 August 2008

China is in the process of  completing  the construction of its first four strategic oil reserves having a total capacity of 16.4 million cu.m by end of this year, a senior government official said yesterday.

China Daily quoted Zhang Guobao, administrator of the National Energy Administration (NEA), as saying after a press conference in Beijing, "The progress has been smooth and all the four bases will be completed by the year end,"  He added that the total capacity of gthe four reserves would be 16.4 million cu m. Zhangis, who is also the vice-minister of the National Development and Reform Commission (NDRC), is China's top economic planner after the administration came into being as part of the reshuffle of government agencies in March.

In order to fend-off the risk of oil shortages and reduce the impact of oil price fluctuations, China started to build its strategic oil reserves in 2004, at an investment of $725 million for the four locations.

China will build these strategic reserves in three phases over 15 years, involving an estimated investment of 100 billion yuan ($14.61 billion). The plan envisages building up fuel resources including oil reserves to reach 10 million to 12 million tons in the first, and a 28-million capacityy addition in the second and third phases. Every 10 million tons of oil equals China's 30-day domestic demand, which these four oil reserves will take care of by 2010.

The first four reserves situated at Dalian, Qingdao, Ningbo and Zhoushan, are expected to maintain strategic oil reserves equivalent to 30 days of imports in 2010.

All of these strategic oil reserve bases are built in coastal provinces, mainly because they rely on imported oil.