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China Builds Oil Reserves to Fill Market Shortfall: Expert
China's consideration of building a strategic reserve of imported oil comes out of its objective of guaranteeing a safe energy supply for the sustainable economic and social development, said a senior energy expert.
Wu Hui, vice director of the Economic and Technology Research Institute under China's oil flagship -- China Petro-Chemical Corp, said that the building of the upcoming oil reserve will include drafting concerned laws and regulations, establishing operational systems, constructing reserve facilities and affiliated infrastructure as well as a data network.
He said that China's sole aim towards the strategy is to make effective use of overseas resources to sustain domestic consumption of oil in case of international oil supply interruptions, such as regional wars and disturbances in the resource area of the Middle East.
The move is far from being an indication of the country's involvement in influencing the international oil price, Wu said.
In Premier Zhu Rongji's report on outline of the new five-year plan, it stated that domestic development and production of oil can no longer keep pace with the needs of the country's economic and social development. China needs to take all possible measures to conserve and substitute for oil, accelerate the exploration and exploitation of oil and natural gas resources, and make effective use of overseas resources.
Wu said that based on the experience of other foreign countries, it usually takes eight to 10 years to build an effective oil reserve, which is equal to 10 million to 15 million tons of oil imports. The cost is estimated at 20 to 30 billion yuan.
The storage is much lower than 30 million tons of the oil import standard set by the international energy organization for their member countries, he added.
The expert said that China has considered borrowing the Japanese mode of oil reserve construction, which is composed of government oil reserves and enterprise oil reserves.
Japan's government oil reserve mainly handles crude oil imports, while that of enterprises deal with both crude oil and finished oil products.
China became the net oil importer in 1993, since that time the imports have increased dramatically. It soared up to 70 million tons last year, when the country's crude oil refining amount exceeded 200 million tons.
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