China accelerates filling strategic oil reserves

By Yan Pei
0 CommentsPrint E-mail, July 21, 2010
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China's record-high oil imports in June have caused market speculation that the Chinese government is accelerating the build-up of its strategic oil reserves, the 21st Century Business Herald reported Wednesday.

According to statistics released by the General Administration of Customs, China imported 22.27 million tons of crude oil in June, up 34 percent from last year. This marks the fourth time since last December that China's monthly oil imports topped 20 million tons.

Part of the oil imports went straight into China's national oil reserves and the commercial oil reserves of China National Petroleum Corporation (CNPC) and Sinopec Group, a source close to the National Energy Administration told the newspaper.

China's oil imports started to recover from April 2009 and have remained at a high level since the second quarter of 2009. Until now, the country had maintained a monthly oil import of approximately 20 million tons.

The surge is connected to China prioritizing its strategic oil reserve plan, the newspaper cited the source above as saying.

China launched the strategic oil reserve plan in 2003. The country planned to complete all three phases of oil reserve base construction in 15 years. The first phase—located in Zhejiang's Zhoushan and Zhenhai, Liaoning's Dalian and Shandong's Huangdao—commenced operation in 2008. These four bases hold the equivalent of 30 days of China's oil imports.

The construction of the Duzishan oil base in the Xinjiang Uygur Autonomous Region started last September, marking the beginning of the second phase of China's strategic oil reserve plan. It's estimated China has by now completed construction of the Duzishan oil reserve base. The base is scheduled to start filling oil in the coming October. The second phase consists of eight oil reserve bases, located in cities include Guangdong's Zhanjiang and Huizhou, Gansu's Lanzhou, Jiangsu's Jintan, Liaoning's Jinzhou and Tianjin.

The last phase of China's strategic oil reserve plan is expected to be completed in 2020. Chongqing's Wanzhou district, Hainan Province and Hebei's Caofeidian are reportedly likely to be chosen as oil bases for the third phase.

Once the strategic oil reserve plan is finished, China will have oil reserves equaling about 100 days of net oil imports.

On Monday, the International Energy Association (IEA) said in a report that China had surpassed the United States to become the world's biggest energy consumer in 2009. China rejected the report on the grounds that the IEA's data on China's energy use is unreliable.

China's business press carried the story above on Wednesday. has not checked the stories and does not vouch for their accuracy.

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