China will start to fill its strategic oil reserves in the fourth quarter of this year with its own oil, according to sources with the administration of one of the reserve bases yesterday.
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 end of the year.
Zhang guobao, vice minister of National Development and Reform Commission, also released information about oil filling in New Orleans, the United States on Tuesday.
China launched its strategic oil reserve project in 2003.
Besides zhenhai, three other sites are Daishan of Zhoushan in Zhejiang Province, Xingang of Dalian in Liaoning Province in the northeast and Huangdao of Qingdao in Shandong Province in the east.
Located near Hangzhou, the 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 of the four oil reserve 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 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 Development and Research Center of the State Council, during a recent interview.
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 whenever oil prices rise 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 United States, Japan and Germany can meet these countries' oil demands for 158, 161 and 127 days, respectively.
As oil prices continue to skyrocket, 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 little 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 over the next 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.