By year's end, China's effort to complete its new strategic oil reserve is expected to be completed, with oil flowing into the site, senior government officials confirmed to China Daily.
The move is not expected to have a major impact on international crude oil markets, since the crude will come from domestic supplies, officials said.
A senior director with the National Development and Reform Commission (NDRC) yesterday said in a telephone interview that the country is to wrap up the first-phase of construction of its initial strategic oil reserve at Zhenhai in east China's Jiangsu Province by the end of this year.
The official declined to elaborate and refused to be named.
Wang Jiming, vice-president of Asia's largest oil refiner, Sinopec, earlier told reporters in Qingdao that the first-phase of construction at the Zhenhai reserve base will conclude in the third quarter, with oil flowing into the facility by year's end.
The local oil reserve administration at Zhenhai in Zhejiang said the 16-tank facility is to be completed by the end of August, and the final capacity of the oil reserve base will hold up to 52 oil tanks to store 5.2 million tons of oil, a recent Xinhua report said.
Upon completion, the Zhenhai base will be the largest one among the four strategic oil reserves across the nation now being planned.
In an effort to safeguard the nation's energy security for the long term while cushioning China against possible interruptions of foreign supplies, the country launched its strategic oil reserve construction about two years ago.
Locations of the four reserve bases include Zhenhai and Daishan in Zhoushan of Zhejiang Province, Xingang of Dalian in Northeast China's Liaoning Province, and Huangdao of Qingdao in East China's Shandong Province.
The country's two major oil firms, Sinopec and PetroChina, will build the four reserve bases, sources close to the plan said, asking not to be identified.
"The company is still in the preliminary process of building the Qingdao oil reserve, and the first-phase project is scheduled to complete construction by 2007," said Sinopec's Wang. But he did not provide additional detailed information about the other two reserve bases.
Inside sources said the first-phase infrastructure projects at the four bases are to finish construction by 2008.
The oil storage capacity of the first-phase construction is targeted at 14 days of oil imports, the sources said.
Zhou Fengqi, former director-general of the NDRC's Energy Research Institute, told China Daily the storage of China's planned strategic oil reserves ultimately aims at 90 days of oil imports in the previous year, or a fourth of the total oil import for one year.
"The whole construction will take several years to complete," Zhou said, choosing not to disclose detailed information.
"The strategic significance is obvious, upon which a consensus has been reached by industry experts. It will enable China to assure national security from an energy perspective and put the country in a favourable position in the fluctuating oil market," said Gao Shixian, director of the Centre of Energy Economics and Development Strategy under the NDRC's energy research institute.
Government officials said the stockpiling of reserve oil in China is not likely to pose a threat to the oil market in the international arena, as the country will rely on the domestic supplies rather than imports to fuel the oil reserves.
Zhang Guobao, vice-minister of the National Development and Reform Commission, earlier last month said the country will fill the reserves with domestic oil, rather than oil bought on international markets. He spoke on the sidelines of a conference in New Orleans, Louisiana of the United States.
Beside, China's annual oil imports only account for a minor proportion of the world's oil trade, and blaming the skyrocketing crude prices on the international market on China is "unreasonable" and "groundless," Zhang added.
China imported 120 million tons of crude oil last year, accounting for some 40 percent of the country's total oil consumption.
(China Daily July 5, 2005)