China will establish a strategic oil reserve, as its largest
petrochemical producer, Sinopec, plans to stockpile more crude
oil. Sinopec's move is regarded as the nation's first step in
starting the reserve.
According to Zhang
Jiaren, a deputy to the Ninth National People's Congress (NPC)
and vice-chairman of the oil company, Sinopec will double
its oil stockpiles from the current 5 to 6 million tons in
two or three years.
Attending the Fourth
Session of the Ninth NPC, which ended yesterday, Zhang said
an increased stockpile will help the company fend off oil
price hikes.
Zhang said the
central government is discussing details of the oil reserve
framework, "but the national reserve will not be used
to intervene in the oil market unless an emergency occurs."
The national strategic
oil stockpile, listed in the 10th Five-Year Plan (2001-05),
is seen as economically and politically crucial for China,
a net oil importer since 1993.
Wang Tao, a member
of the Standing Committee of the NPC, said it is the right
time to set up a reserve, as supply exceeds demand on international
markets at present and China has enough foreign currency to
pay for its oil importation.
Wang suggested
that the national oil reserve should be big enough to cater
for domestic consumption for at least three months if imports
were halted.
"That means
15 million tons should be preserved as a national reserve
and the amount should grow as imports rise," he said.
According to Wang,
in the coming 10 years domestic demand could rise by 4 percent
annually, while production will increase by only 1.3 percent
a year.
Wang said it will
take China 10 years to set up the national strategic oil reserve.
The newly discovered large oil pockets should be conserved
as part of the national stockpile.
To make up for
oil companies' losses as a result of preserving these new
oilfields, the government should grant subsidies to them,
Wang suggested.
Li Dadong, an NPC
deputy and member of the Chinese Academy of Engineering, said
clean coal technology, which can turn coal into oil-like fuel,
should also play a role in the oil reserve framework.
Although it is
not feasible to commercialize the technology on a large scale
due to the high production cost, it can serve as a strategic
reserve, Li said.
He revealed that
China is expected to launch a US$1.8-billion project to turn
coal into oil in Shaanxi Province, which should produce 2.5
million tons of oil annually.
(China Daily 03/16/2001)
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