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China to build up strategic oil reserves
By Fu Jing (China Daily)
Updated: 2005-09-14 06:03

China will not buy more crude oil while international prices remain so high, a senior cabinet official said yesterday.


Zhang Guobao, deputy director the State Development and Reform Commission, said China will not use imported oil to fill its strategic reserve at a press conference in Beijing September 13, 2005. [Xinhua]
While denying that China, a relatively small importer of crude oil, is a threat to the world on account of its increasing energy consumption, Zhang Guobao, vice-minister of National Development and Reform Commission, said the country will research other methods of building its oil reserves.

"We import only 6 per cent of the total consumption and we will not change the policy of domestic dependence," Zhang said at a press conference of the Information Office of the State Council.

"It would be a great financial risk for China to buy oil from the international market for its strategic reserve programme, as the current global oil price has been fluctuating at a high level."

Zhang, whose commission is the most powerful cabinet department monitoring economic and social development, said oil has already flowed into some reserve facilities, but he didn't elaborate.

China's two major oil firms, Sinopec and PetroChina, will build four reserve bases. Reports have said that three of them are in East ChinaZhenhai and Daishan near Zhoushan in Zhejiang Province, and Huangdao near Qingdao in Shandong Province as well as Xingang near Dalian in Northeast China's Liaoning Province.

China is a relative newcomer to the idea of setting up a strategic oil reserve. Developed countries such as the United States and Japan have had them for years.

As for the size of China's oil reserve, Zhang said some people say it should equal 90 days of consumption, and others say a 120-day consumption.

"This should be determined by China's real conditions," he said.
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