Filling of China’s Strategic Oil Reserves Apparently Delayed

According to unidentified officials from Chinese oil majors, China’s remaining two of four strategic oil reserve bases will begin to be filled with oil sometime within the next year. One based in Huangdao, Shandong province will start to be filled by the end of 2007, while the other in the port city of Dalian, Liaoning province, will commence during the first half of 2008 (China Daily, June 28). According to a report from AFP, however, these time periods reflect a delay in the original schedule, most likely due to the high prices of oil in international markets. AFP noted that Sinopec had previously declared that filling its Huangdao base would be completed by mid-2007, but with oil prices currently at $70 per barrel, it has become too expensive to fill the reserves (AFP, June 28). China’s strategic oil reserve, with a current total capacity for 16 million tons of crude oil, is meant to protect the Chinese economy from sudden supply disruptions or spikes in international oil prices. Yet, energy analysts contend that, given China’s enormous demand for crude oil, the size of the reserves must be at least doubled in order to be effective. The National Development and Reform Commission has announced that China intends to expand its strategic oil reserves to 28 million tons, though no such timeline has been established (China Daily, June 28).