South China's Guangdong Province, the largest oil consumer and importer in the country, is planning an investment totaling 6 billion yuan ($880 million) to build two strategic crude oil and oil product reserve bases, which was listed in the province's top 10 new projects mapped by Guangdong’s provincial economic planning body, according to the Caijing.

The two oil reserve bases were included in the project named "Resources Reserve Project". Besides crude oil and oil products, Guangdong also plans to build storages for coal, grain and edible oil. The overall investment in the resources reserve project is 93.5 billion yuan.

All 10 projects have yet to be approved by the central government.

China's oil reserve system includes four levels: national strategic oil reserves, local oil reserves, large enterprises' oil reserves for commercial usages and smaller companies' reserves. So far, the country has just completed its first stage of national strategic oil reserve bases construction.

One part of Guangdong's planned oil reserve projects are for the second stage of construction of the national oil reserve system, while the other part is Guangdong's own oil reserve and subsidiary projects. However, Guangdong is planning to integrate its provincial oil reserves and enterprise commercial oil reserves into the overall national plan, which could make the provincial reserve plan be approved more easily, the Caijing cited sources as saying.

Guangdong now has only a 20-day reserve, far below the safety line of 90 days, which troubles the government as it needs to increase oil supply due to demand.

As the largest oil consumer in China, Guangdong is often hit by fuel shortages. Due to the diesel shortage after the snow havoc in south China this spring, diesel was sold at up to 6.8 yuan per liter at some private gas stations in Guangdong, compared with the government's guide price of 5.28 yuan per liter.

(Chinadaily.com.cn July 25, 2008)