China will start to fill its strategic oil reserve in the fourth quarter of this year with its own oil, according to sources with the administration of one of the reserve bases on Friday.

 

According to Zhenhai Strategic Oil Reserve Administration in east China's Zhejiang Province, 16 oil-tank facilities will be completed by the end of August and oil storage is expected to start by year-end.

 

Zhang Guobao, vice minister in charge of the National?Development?and Reform?Commission, also released the information about oil filling in New Orleans, the US, on June 28.

 

China launched its strategic oil reserve project in 2003. Besides Zhenhai, other three sites are Daishan of Zhoushan City in Zhejiang, Xingang of Dalian City in northeastern Liaoning Province and Huangdao of Qingdao City in eastern Shandong Province.

 

Located near Hangzhou City, Zhenhai oil reserve base will house 52-tank facilities with a storage capacity of 5.2 million cubic meters, the largest among the four sites.

 

According to the plan, construction work of the four bases will be finished by the end of 2008. The strategic oil reserve and the reserve stored by oil enterprises combined?are set to be on a par with the country's 30-day oil imports, sources said.

 

Establishing a strategic oil reserve is an indispensable measure to safeguard China's oil security and reduce risks concurrent with oil price fluctuation, said Feng Fei, an expert from the State Council's Development and Research Center (DRC), during a recent interview with Xinhua.

 

According to Feng, China has to pay additional billions of US dollars in purchasing oil owing to its lack of a strategic oil reserve and oil price hike in the international market.

 

Developed nations across the globe started to build their own strategic oil reserves in response to the oil crisis in the 1970s. Currently, oil reserves of the US, Japan and Germany can meet these countries' oil demands for 158, 161 and 127 days respectively.

 

As oil prices continue to skyrocket recently, oil-guzzling developed nations all took measures to increase their strategic oil storage. As a country whose oil demand is much lower than that of the developed nations, China is expected to exert?very small?impact on pushing up global oil prices following the construction of a strategic oil reserve mechanism.

 

In 2004, China imported 120 million tons of crude oil, accounting for 40 percent of the country's total oil consumption. A forecast says China's oil demand will increase at least by 4 percent year-on-year if the Chinese economy grows by 7 percent annually in the upcoming 15 years.

 

Even under such an unfavorable situation, Chinese officials have repeatedly said China's energy strategy is to depend on domestic production, the reduction of oil waste and improvement of energy usage efficiency.

 

Insiders in the industry still debated how much oil reserve China should keep. Gao Hedong, a senior engineer with the pipeline storage and transport branch of China Petrochemical Corporation (Sinopec), suggested more strategic oil reserve bases be constructed in China's inland regions in addition to the four coastal sites.

 

(Xinhua News Agency July 2, 2005)