Han Xuegong, a veteran analyst with CNPC, agreed.

"Chinese oil giants are all State-owned and are supposed to shoulder both economic and social responsibilities. Therefore, they should take the lead role in setting up commercial reserves," Han said.

The experiences of industrialized countries prove that commercial oil reserves at company level are effective in balancing supply and demand, said Zhao Yumin, with the Chinese Academy of International Trade and Economic Cooperation, a ministry think-tank.

The NDRC announced recently that the country's first strategic oil reserve base in Ningbo, East China's Zhejiang Province, had been put into operation.

The government approved four national strategic oil reserve sites in 2004. The other three are in Daishan, also in Zhejiang; Huangdao, in East China's Shandong Province; and Dalian, in Northeast China's Liaoning Province.

Han said that compared with State-level reserves, commercial ones operated by oil companies could be more reasonably allocated.

"CNPC's oil fields are spread all over the country, and commercial reserves can be set up at those sites to meet needs in different places," he said.

1

2

(For more biz stories, please visit Industry Updates)