BEIJING – China has started filling tanks at its largest oil reserve, taking advantage of tumbling world crude prices, state media reported Thursday.
The facility's 10 tanks, which have a total capacity of 6.3 million barrels, are operated by China National Petroleum Corp., the nation's top oil producer, and are located in the northwest Xinjiang region, the Xinhua news agency said.
This is just the first phase of the reserve, which will eventually have an overall capacity of more than 50 million barrels of crude, mainly produced in Xinjiang or imported from neighbouring Kazakhstan, it said.
Total investment in the project is 6.5 billion yuan (950 million dollars), with 856 million yuan invested in the first phase, it added.
Analysts said the ongoing slump in the global oil market, with crude prices falling 78 percent since hitting record highs above 147 dollars per barrel in July, made a good opening for China to expand its crude imports and reserves.
"People thought before it was not a good time to raise oil reserves due to excessively high prices," said Zhou Fengqi, a former official with the National Development and Reform Commission, the top economic planning agency.
"But there is no excuse for not seizing the opportunity now as oil prices are relatively cheap," Zhou said, according to Xinhua.
China began to build four strategic oil reserve facilities on its east coast earlier this decade, and two of these are now in operation, Xinhua said.
The aim of the reserves is to guarantee supply in times of need as the nation's a growing economy demands ever-more energy to fuel the factories that supply many of the world's consumers with manufactured goods.
Strategic oil reserves in the country are expected to reach 101.9 million barrels by the end of this year and rise to 145.9 million barrels in 2010, with 511.9 million barrels a long-term goal, Xinhua said.
A net importer of oil since 1993, China imported around 1.2 billion barrels of crude in 2007, up 12.4 percent from the previous year.
The country's current oil consumption is about eight million barrels per day, according to data from the Securities Daily, a state-run newspaper.
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