China orders oil companies to build reserves
(AFP)
Updated: 2005-11-14 17:13

China will soon order the nation's oil companies to build their own refined oil reserves to guard against possible shortages, the Shanghai Daily reported on Monday, citing a government official.

An attendent prepares to fill a car's petrol tank at service station in Beijing. China will soon order the nation's oil companies to build their own refined oil reserves to guard against possible shortages, the Shanghai Daily reported, citing a government official. [AFP]

"It's necessary for oil companies to build reserves as refined oil is an important resource for the proper operation of the economy," the paper cited the Commerce Ministry's vice director in charge of commercial reforms, Wang Xiaochuan, as saying.

Speaking at a petroleum forum, Wang did not disclose the capacity of the required reserves, although it would be within 20 percent of China's current refined oil consumption.

Wang said discussions on the regulations were underway and the rules would be put in place shortly, according to the paper.

China, the world's biggest consumer of oil after the United States, embarked on a plan last year to build state strategic crude reserves as the country's demand for the fuel continues to grow.

The government said last week China's total crude oil consumption was expected to rise by 6.0 percent this year, although this was down from a 19-percent jump last year.

Imports of crude oil will total 130 million tonnes this year, up 5.0 percent from last year, Liang Shuhe, deputy director of the ministry's foreign trade division, said.

Crude oil imports in 2004 rose 34.8 percent over 2003.

Liang said the year-on-year import growth rate for 2005 would be down from the 2004 level due to high oil prices, decreases in fixed-asset investment, an easing of local power shortages and the development of alternative fuels.

China last year consumed 314 million tonnes of crude oil, of which it imported 122.7 million tonnes, taking 8.0 percent of world consumption.

Although growth in China's oil demand has slowed this year, experts widely expect demand to rise again amid continued strong economic growth.