Sinopec Corp, China's largest oil refiner, is planning to build four refined oil stockpile bases in the country, according to its president.
The four oil products reserves will be located in eastern, western, northern and southern parts of the country. The bases will have a total capacity of 8 million tons, Wang Tianpu, president of Sinopec Corp told Shanghai Securities News in Hong Kong on Monday.
The company will not use privately owned stockpile capacities for its reserves, said Wang.
"The refined oil reserves can help stabilize the domestic petrochemical market in case supply shortages occur," Wang told Shanghai Securities News.
The Beijing-based company may also take charge of construction of two national strategic crude oil reserves in Qingdao and Rizhao in Shandong province. In Qingdao the stockpile will use an underground grotto to store the oil, said Wang.
China's stockpile of refined oil products is expected to touch 10 million tons by the end of 2011. The country will establish 3 million tons of oil product reserves this year, said industry insiders with China Petroleum and Chemical Industry Association.
Experts said the timing is now right to build up reserves of more oil products like gasoline and diesel, as the market demand is declining and stockpiles of domestic refiners are relatively high.
"The move can help stabilize domestic refined oil prices," said Lin Boqiang, professor, Xiamen University. "When there is a big gap between domestic and global oil prices, the government can use the reserves to ease the pressures of domestic refiners."
The National Energy Administration (NEA) announced in February that China would build eight new crude oil reserves by 2011. The program will increase its strategic crude reserve capacity to 44.6 million cu m.
(China Daily April 1, 2009)
