China announced Tuesday the setting up of a national oil reserve center, the top economic planning agency confirmed.

 

China started a state strategic oil reserve base program in 2004 as a way to offset oil supply risks and reduce the impact of fluctuating energy prices worldwide on China's domestic market of refined oil.

 

With the approval of the government, the center was officially launched Tuesday, said the National Development and Reform Commission, which oversees a wide-range of social and economic affairs, including energy.

 

The center, the administrative body of the country's national oil reserve system, takes responsibility for building and making use of the country's strategic oil reserves, the commission said in a statement.

 

The commission said the center will also keep an eye on the movement of demand and supply of both domestic and international oil markets.

 

The commission said the country has decided to establish four strategic oil reserve bases in Dalian, Qingdao, Ningbo and Zhoushan, respectively. All of them are on the coast. The first one in Ningbo, eastern China's Zhejiang Province, has started to stock up on oil.

 

They are designed to maintain strategic oil reserves of an equivalent to 30 days of imports, or about 10 million tonnes.

 

NDRC official Hu Weiping said strategic oil reserves will be used in case of emergency or when the country is suddenly in short supply. "Never in any circumstances will China use its strategic oil reserves to rig oil prices," he said.

 

Short of financial resources, China can not expand its strategic oil reserves very quickly. Meanwhile, with high and fluctuating oil prices in the international market, the country's increment of oil reserves is certain to have an impact on the further movement of oil prices, NDRC vice-minister Chen Demin said previously.

 

China's strategic oil reserve stood at two million to three million tonnes, and would be expanded to about 12 million tonnes by 2010, said Chen.

 

The launch of the national oil reserve center is meant to beef up the country's energy security and solve such problems as shortage of processed oil supply, Niu Li, an analyst with the State Information Center, told Xinhua.

 

China's eastern and southern areas have seen another serious and sudden shortage of fuel and diesel supplies since December this year.

 

According to a statement from the third China-U.S. Strategic Economic Dialogue, the United States and China agreed to strengthen cooperation on the building and management of strategic oil stocks.

 

The statement said, "Coordinated use of strategic petroleum reserves increases energy security for net oil-importing countries during times of significant supply disruption."

 

Imports accounted for 66 percent of U.S. domestic petroleum use last year. The figure for China, which became a net importer of oil during the 1990s as its economy took off, was 47 percent.

 

(Xinhua News Agency December 18, 2007)