China build up oil reserves amid weak prices

BEIJING (XFN-ASIA) - China will take advantage of sliding oil prices to increase imports and build up its strategic reserves, a senior economic planner said.

Zhang Guobao, vice chairman of the National Development and Reform Commission, said in a report carried by the People's Daily that China will also move forward with phase two of building strategic reserve facilities.

The state planner has finished the draft for Phase II of building the reserves, involving total storage capacity of 26.8 mln cubic meters.

China also encourages companies to use spare storage capacity to increase their stockpiles, Zhang said, adding that overseas investment and exploration conditions are turning favorable.

Crude oil prices fell below 40 usd per barrel recently from the peak in July of 147 usd, making stockpiling cost-effective.

State media reported that around 7.3 mln barrels of oil had been delivered to the Huangdao facility, the third strategic reserve, in November, with more stockpiling planned in December and January.

The first two bases, at Zhenhai and Zhoushan, were filled more than a year ago. Construction of the Dalian facility, the fourth reserve, is due to be completed by year's end.

(Forbes)