Asia's top refiner is busy building up China's first commercial
oil reserve company as the country focuses more on securing vital
energy supplies.
Sinopec spokesman Huang Wensheng revealed to China
Daily exclusively on Friday that the refiner had set up its
own corporate oil reserves, spreading under subsidiaries of the
group company.
"A unified administration can trim the operation cost and manage
the reserves in an efficient and integrated approach," he said.
Huang did not elaborate on details when the firm will be
established and how large the reserve will be under its operation.
But he stressed that Sinopec's tanks throughout China can
accommodate enough commercial reserves.
A senior press official from Sinopec Group confirmed the move,
saying Sinopec had realized the necessity of streamlining the
administration and operation of corporate oil reserves.
"It is an internationally recognized tendency for a country to
build up oil reserves at both State and corporate levels," the
press official said.
"That is why we are taking the lead to set up the company taking
care of our commercial reserves. It is easier and more effective
for an independent company to operate and manage those
reserves."
China is investigating every means to secure fuel supply, as
demand increases.
In addition to State strategic oil reserves, China is pinning
hopes on corporate reserves to leverage demand and supply. The
proposed first Energy Law of the country will regulate the
necessity of setting commercial oil reserves at corporate level,
according to key drafters.
The law under drafting may require State-owned large and
medium-sized oil companies to establish corporate reserves to
maintain effective oil supplies, Wu Zhonghu, one of the core law
drafters, said.
Sinopec, as Asia's largest refiner, imported 70 percent of crude
it needed for oil refining business last year. Corporate reserves
will play an extremely important role for the firm to fend off
additional risks brought by fluctuations in global oil prices, Han
Xuegong, a senior consultant with China National Petroleum
Corporation (CNPC), said.
A source from PetroChina, CNPC's listed arm, revealed to
China Daily that his company is also working on corporate
reserves, but no details are available at this time.
Shanghai Securities News reported on Friday that Sinochem
Corporation had purchased 250,000 tons of crude from the Middle
East and will store them in Daishan as corporate reserves this
month. Sinochem refused to make any comment on the report on
Friday.
The government can give some incentives to encourage large
companies setting corporate reserves. But it is also oil companies'
responsibility to leverage oil supply and demand - a common
practice in market-oriented countries, according to Jiang Xinmin,
an analyst with the Energy Research Institute under the National
Development and Reform Commission, China's top economic
planner.
The Chinese government approved four national strategic oil
reserve sites in 2004. They are Ningbo and Daishan of Zhejiang
Province, Huangdao of east China's Shandong Province and Dalian in
Liaoning Province.
The NDRC announced that the country's first strategic oil
reserve base in Ningbo had been put into operation. Insiders
revealed that the Daishan site has also been in operation.
(China Daily May 19, 2007)