China aims to build emergency petroleum reserves that could meet 90 days to 100 days of consumption, said Zhang Guobao, head of the National Energy Administration.

Oil drop fuels reserves building

The target is equivalent to the level of the Organization for Economic Cooperation and Development, which includes 30 nations including the United States, Germany and Japan, Zhang was quoted by a newsletter of China National Petroleum Corp as saying yesterday.

China is taking advantage of the drop in oil prices, now at around US$50 a barrel, to build stockpiles. They had hit a record high of US$147 in July.

China's net crude imports rose to 15.87 million tons, or 3.73 million barrels a day, in March, the highest in eight months, customs data showed on Friday.

"Strategic oil stockpiling to exploit the bottom of the price cycle, as well as normal commercial purchases, might have accounted for this higher-than-expected March import figures," said Mirae Asset analyst Gordon Kwan.

The government has filled the first batch of four petroleum reserves along the east coast, which hold the equivalent of 30 days of oil imports, the newsletter said.

It plans to start building eight storage sites in the second phase this year, which will include some underground caverns and bases in inland regions, Zhang said.

China Shipping (Group) Co President Li Shaode had earlier proposed the government use some of its foreign exchange reserves to invest in floating oil reserves.

(Shanghai Daily April 15, 2009)