By Hao Zhou (chinadaily.com.cn)
Updated: 2007-09-13 16:10

China hopes to have 12 million tons of strategic oil reserves by the end of 2010, said Chen Deming, deputy director of the National Development and Reform Commission (NDRC), the Shanghai Securities News reported today.

Current strategic oil reserves are recorded at between two and three million tons. The NDRC hopes to quadruple this number by the end of 2010, said Chen, speaking at the 8th US-China Oil and Gas Industry Forum which was held September 9-11 this year in San Francisco, California, the United States.

He also suggested planned oil reserves in 2010 will equal one month of China's net import of crude oil, and that number will be raised further, to an equivalent of three months of imports, by 2020, in conformity with recommendations of the International Energy Agency (IEA). China is not currently a member of IEA.

Hu Weiping, principal of NDRC's oil and natural gas department, said China's oil reserve is for any unexpected energy emergencies and not for manipulating market oil prices, in answer to the international community's doubts about the country's oil reserve policies.

World crude oil futures prices yesterday topped US$79 per barrel, indicating this moment is definitely not a good opportunity to raise national oil reserve levels.

The national strategic oil reserve plan was launched in 2003, and the country planned to construct four oil reserve bases along the coastal areas. Two are located in Ningbo City's Zhenhai district and Zhoushan City, both in Zhejiang Province, east China. The other two are in the Huangdao district of Qingdao City, Shangdong Province, and Dalian, Liaoning Province respectively.

The Zhenhai and Zhoushan bases are already in use. The construction of a third base in Huangdao, with a reserve capacity of three million cubic meters, will be completed by the end of this year and it will enter into usage next year.

Referring to the Sino-US cooperation in terms of oil and gas assets, Chen said he hoped the US would outline clear policy regarding Chinese energy enterprises' procurement of American oil and gas assets.

Given China's trade surplus with the US, it is appropriate for its enterprises to invest in oil and gas assets in the US, Chen added. However, he said he is uncertain about whether the US is interested in allowing Chinese enterprises to purchase domestic assets of the US.

China National Offshore Oil Corp (CNOOC), the third biggest oil company in China, tried in 2005 to buy US oil company Unocal Corp for access to its Asian gas reserves, but dropped the bid after US politicians interfered. Later that year, Chevron Corp, another American oil giant, who bade far less cash than CNOOC, ultimately acquired Unocal.