China wants to speed up the stockpiling of strategic oil reserves
as tension in the Middle East grows.
But the scheme will cost billions of US dollars and could take up
to a decade to complete, some sources say.
Although China presently has little oil reserves, planning for a
stockpile has been brought forward.
An
official from a major State-run oil company said the government has
outlined a framework to build up reserves in a bid to create energy
security and is likely to submit a feasibility study to the State
Council for a final review by the end of the year.
The unnamed official, who was involved in the framework planning,
said: "If the report is approved, the program could soon
start."
According to the proposal, the government will purchase imported
oil and store it in tanks in southeast coastal provinces.
The official told China Daily the stockpile could initially
exceed 6 million tons by 2005.
China's energy security plan, initiated two years ago, has quickly
moved back to the top of the government's agenda as a possible war
in Iraq may disturb supplies from the oil-rich Middle East. China
imports 60 percent of its oil from the region.
The international oil price has climbed 14 percent since the middle
of June amid concern a US strike will disrupt shipments.
China's reserves are crucial to buffer its economy against import
disruptions. The nation imports one-third of its oil, which is
expected to rise to 50 percent by 2010.
Without a sufficient national stockpile and oil imports, experts
and officials worry that the domestic supply can only last a few
days.
Despite the concern, several uncertainties may prolong the
fast-track plan.
According to a senior government source, who declined to be named,
there are differing opinions about the stockpiling strategy, such
as the amount of oil needed, the time to start the reserve and more
importantly, paying for it.
"We are still studying the plan," the official said. "Many concepts
have to be clarified."
He
said finding the best way to pay for the oil, which will be a
multi-billion-US-dollar investment, is the biggest dividing
factor.
"It (the financing) is very complicated," he said, indicating that
a consensus has not been reached on whether the massive bill should
be covered by taxes, banking loans or the treasury.
A
major State oil trader said conflicts among different government
departments are also hindering the establishment of the
stockpile.
"They have different opinions and interests," the unidentified
source said.
Insisting government departments are coordinating with each other
to work through their differences, the official said the project
could be launched very soon.
Another question yet to be answered, according to a State
Development Planning Commission official, is what sort of role
should the State-controlled oil companies -- such as the biggest
two, PetroChina
and Sinopec --
play in the program.
As
part of the strategic reserve scheme, the government may also make
PetroChina and Sinopec increase their inventories to supplement the
national stockpile.
A
Sinopec representative said the company is willing to increase its
inventory or keep oil fields undeveloped to add to the nation's
reserves, as long as the government provides preferential
policies.
But the planning commission official said the government cannot
afford to subsidize the local companies.
Han Wenke, vice-director of the Energy Research Institution at the
Commission, said it could take 10 years to complete a comprehensive
reserve system.
(China
Daily September 18, 2002 )