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January 6, 2010

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Work begins on Gansu oil reserve base

CHINA has begun work on a 3-million-cubic-meter oil reserve base in Gansu Province.

The strategic oil stockpiling project, in Lanzhou, costs 2.38 billion yuan (US$348.6 million) and is expected to come into operation in the first half of 2011, China National Petroleum Corp said yesterday.

"Building the state oil reserve bases is conducive to avert oil supply shortages or blackouts and to balance domestic supply and demand against the backdrop of a volatile and uncertain global crude market," it said.

The project, together with Dushanzi state oil tanks in Xinjiang Uygur Autonomous Region that started construction last September, is part of China's second-phase strategic petroleum reserve program which is targeting a total capacity of 170 million barrels, and is due to be completed by 2012-13.

The government has said it would choose some inland regions and underground caverns for its second-phase oil stockpiling program after completing four coastal reserve bases with a total capacity of 100 million barrels at the end of 2008 under the first phase.

Zhang Guobao, head of the National Energy Administration, said China will "certainly" build a third phase. Earlier reports have put the combined capacity of the three stages at 442 million barrels.

Sinopec, Sinochem and CNOOC have stepped up efforts to secure oil for storage to exploit the year-on-year price plunge in crude oil prices.


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