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China has started building [34 million barrels] of oil tanks at Dushanzi in Xinjiang in its far west as part of the second phase of strategic oil reserves. The project will cost 2.65 billion yuan ($390 million) and is due to be finished by July 2011. China finished filling the first phase of its strategic oil reserves at the end of last year and has said it plans to stock up when oil prices are relatively low. China will complete building 8 bases under the second-phase plan within 3-4 years. By adding all three stages, China, the world's second-largest oil user, will have capacity for 440 million barrels of crude oil, or roughly 105 days of net imports at current rate, by 2020.
China will "certainly" build a third phase of strategic oil reserves to meet international standards of reserve capacity, Zhang Guobao, head of the National Energy Administration said. Zhang said China was aiming for enough oil reserve to cover the OECD standard of 90 days.
It is good that China is on the right track to complete their own version of the Strategic Petroleum Reserve. From a Peak Oil point of view, the timing may be a little bit overdue with global conventional crude oil having already peaked back in May 2005, and earlier opportunities to accumulate oil reserves were missed with historical crude oil prices in the $30-$40 range just a few years back, but of course it is better late than never.
As their car population starts to rise, with China car sales jumping up 71% in Jul 2009, their projected oil demand may be set to increase rapidly. Their strategic oil reserves may well be put into use one day when the demand for oil starts to bump up against the limitations of supply.
See also :
1. ASEAN, China, Japan, South Korea mull oil stockpile
2. China's first strategic oil reserve facility to be ready in August
3. China starts filling strategic oil reserve
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