China to have 10-mil bbl of crude storage tanks ready by end-Aug

China to have 10-mil bbl of crude storage tanks ready by end-Aug

Hong Kong (Platts)--7Jul2005


China is set to complete construction on a batch of 16 storage tanks under the
first phase of its strategic crude stockpiling program in eastern coastal
Zhejiang province at the end of August, and the government could start buying
crude for the reserve as early as the fourth quarter of this year. 

Each of the 52 tanks to be eventually built at the Zhenhai storage base in
Zhejiang province will have a capacity of 100,000 cu m, or 629,000 bbl, a
source with Sinopec Zhenhai Refining and Chemical said Wednesday. The 16 tanks
will thus make available space to store some 10-mil bbl of crude. The entire
Zhenhai development, providing some 32.7-mil bbl storage space, will be ready
only by the end of 2006, the source said. China processed some some 5.48-mil
b/d of crude in 2004, up 13.55% on the year. ZRCC, which operates China's
largest 19-mil mt/yr (380,000 b/d) refinery in Zhenhai, has been commissioned
by the central government to build the 5.2-mil cu m Zhenhai strategic reserves
base.

The entire Zhenhai base development is estimated to cost about Yuan 3.75-bil
($454-mil). Besides Zhenhai, the government has also picked Aoshan in
Zhejiang, Huangdao in eastern Shandong province and Dalian in northern
Liaoning province as sites for the first phase of its strategic reserves
program. The Aoshan base will have 5-mil cu m of storage space and investment
is pegged at more than Yuan 2.9-bil. The Dalian and Huangdao bases will each
have 3-mil cu m of storage capacity under the first phase development. All
four bases are expected to cost a total of about Yuan 10-bil to build.
Development of the Zhenhai base is the most advanced stage among the four, and
the central government is eyeing on an end-2008 completion schedule for all
four, the official Xinhua news agency reported earlier this week. In the
meantime, the impending completion of the first 16 tanks in Zhenhai has set
the market abuzz on when China would start buying for the stockpiling, even as
some contradictory messages have emerged from Beijing.

Xinhua Monday said the country would start filling up the Zhenhai tanks in the
fourth quarter of 2005 with indigenous crude production, citing unidentified
officials with the Zhenhai reserves administration office. The foreign news
agency quoted Zhang Guobao, vice-minister of China's National Development and
Reform Commission, as saying last week in New Orleans, the United States, that
China would not import crude for its strategic stockpiling because of cost
concerns, and would use indigenous crude for the purpose. He also reportedly
said the Chinese government would consider allowing oil companies pay their
taxes in the form of physical oil delivery into the national reserve stockpile
program. However, another NDRC official, the director general of the energy
bureau Xu Dingming, was quoted last week by the foreign news services as
telling a business conference in Beijing that high oil prices may cause China
to delay filling its strategic reserves indefinitely.

For more information about China, take a trial to Platts Oilgram News at
http://oilgramnews.platts.com

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.