Construction of state strategic petroleum reserve system under way
August 28, 2006Xinhua News Agency
BEIJING - China is stepping up construction of the state petroleum reserve system (SPRS) as more regions have expressed their hope to become part of the system.
Recently, the National Development and Reform Commission (NDRC) has announced that the 52 oil tankers in the state petroleum reserve base in Zhenhai in east China's Zhejiang Province will be put into use in October.
Zhenhai base is one of the first batch of strategic petroleum reserve bases in China, and it is the biggest in scale and fastest in construction progress.
The base, located in Ningbo City, is close to the Zhenhai Refinery, the biggest oil refining plant in China. The base has a total investment of about 3.7 billion yuan, and the reserve capacity of 5.20 million cubic meters. The construction of the base is undertaken by Sinopec by form of EPC general contracting.
China's first batch of the four strategic petroleum reserve bases are designed to be in Zhenhai (Ningbo of Zhejiang Province), Huangdao (Qingdao of Shandong Province), Daishan (Zhoushou of Zhejiang Province) and Dalian (Dalian of Liaoning Province). The other three reserve bases are expected to be completed by 2008. By then, they will form a total petroleum strategic reserve capacity for consumption of more than ten days.
China started considering of the founding of petroleum strategic reserve bases in 1993, and gave the official approval from in 2004. The total investment of the bases is estimated to exceed 100 billion yuan, and a construction time of 15 years.
At present, China has started selection of locations of the second batch of petroleum reserve bases.
Many regions are interested in edging into the list of the second batch of the petroleum reserve bases.
Guangdong Province in south China has submitted the application to NDRC and the State Petroleum Reserve Office. The application of Guangdong is entitled the 'Plans on Selection of Locations of the National Petroleum Reserves in Huizhou, Maoming, Zhanjiang, Shenzhen or Zhuhai.
According to sources with NDRC, the second batch of the reserve bases will be bigger in distribution network, surely to include west China. The network pattern is of great importance.
There need several basic conditions for regions to become the reserve bases. They must have convenient access to oil, with coastal deep-water harbor capable to berth oil tankers of 300,000 tons, and convenient transportation access including pipeline and railways. They must be safe with a huge inland areas, capable to establishment of a sound supporting facilities. They shall be rational in economic structure, with not very high costs.
During the process of establishment of strategic petroleum reserve in China, experts have suggested the country to have a clear understanding of three points.
First is to attach importance to the process.
Second is to make clear definition of responsibility and interest of various sides. The country shall work out the obligations various sides must shoulder in the operation process of various parties of interest involving in the reserve system including the government, enterprises and oil consumers. Drafting the Energy Law will be a procedure of must.
Third is to have a clear understanding of the importance of the long-term energy safety strategy.
The country must establish and reform the pricing mechanism of the domestic oil prices, and work out long-term supporting policy on raising efficiency of utilization of energy, so as to ensure use of strategic reserve to a minimum degree.
The Ministry of Commerce issued the statistics on increase of major import commodities of China in the first half. Of them, import volume of crude oil increased 15.6% year on year, and the value surged 53.9%; while import volume of oil products went up 16.1%, and the value up 71.8%. According to the latest statistics from the General Administration of Customs, the average price of import of crude oil was 452.9 US dollars/ton in the first half, up 33% year on year, and the average price of imported oil products was 423.3 US dollars/ton, up 48%.
As the second biggest oil consumer in the country, China's dependence on import of oil products is 40%. Prices of oil, as a basic energy, have influenced the prices of the whole industrial sector, and will finally affect the GDP growth.
The continuous fast increase of crude oil import is attributed to the brisk demand in China, and the rocketing demand for oil and rising oil prices in the world have caused China a lot of money on import of crude oil.