Petrochemical firm Sinochem Corp is likely to complete a 2 million cu m oil reserve in Zhoushan in Zhejiang province next year, sources close to the project said on Wednesday.

The reserve, which includes both crude and refined oil stockpile, has two phases for construction. Sinochem has already finished the first phase with over 1 million cu m, said an executive familiar with the project, who declined to be named.

The Sinochem commercial oil reserve is next to the Zhoushan state strategic oil reserve base, which is one of the first four strategic crude oil reserves in China.

Analysts have long suggested China build a comprehensive system of oil reserves to ensure the country's energy security. "In my opinion China should build four levels of oil reserves made up of two parts - the government reserve and enterprise storage," Han Xiaoping, a veteran energy analyst, earlier told China Daily.

"The government reserve should include two levels, national oil reserves by the central government, and oil reserves by local governments. The enterprise storage should also be at two levels, commercial oil reserve by the top oil companies like PetroChina and Sinopec, and oil storage by the medium and small oil companies," said Han.

China has now completed construction of the first four state strategic oil reserve bases, which are respectively in Zhenhai and Zhoushan in Zhejiang, Huangdao in Shandong province, and Dalian in Liaoning province. Besides the national reserves, China's leading oil companies like PetroChina and Sinopec have all built up their own commercial oil stockpile.

The two national oil reserve bases in the eastern Zhejiang province have both been fully filled with crude, according to operators of the two bases on Wednesday.

The Zhenhai national oil reserve base, located in Ningbo, was put into operation in August 2006. Covering a total area of 1.12 sq km, the base has a design storage capacity of 5.2 million cu m.

The Zhoushan national oil reserve base consists of three phases, with total capacity of 5 million cu m. All the three phases have been completed last year, said Tang Zhibin, vice general manager of the base operator Zhoushan National Oil Reserve Base Co.

"Zhoushan still has potential to build other oil reserves, and it is possible to be the location for the second batch of the national oil reserve bases," said Tang.

The two other national oil reserve bases, in Huangdao and Dalian, respectively have capacities of 3.2 million cu m and 3 million cu m.

China will start building eight more national oil reserve bases, including one in Huangdao in Shandong and one in Jinzhou in Liaoning.

(China Daily June 6, 2009)