US' Bodman says will urge China to use strategic reserves wisely

Tokyo (Platts)--12Dec2006

US Energy Secretary Samuel Bodman Tuesday said he would encourage China
to use its strategic petroleum reserves carefully.
The reserves should only be used in case of supply disruptions, Bodman
told reporters in Tokyo, "There is sometimes a tendency to use petroleum
reserves politically and that is not the way it should be used," he said.
Bodman is scheduled to visit Beijing later this week to attend the first
ever summit of the world's biggest oil-consuming nations to be held in the
Chinese capital on December 16. The US, China, Japan, South Korea and India
are participating in the summit.
Bodman also said he would encourage India to start building its petroleum
stockpile and would encourage both China and India to become members of the
International Energy Agency.
The Indian cabinet earlier this year approved a proposal to build storage
facilities to stock 5 million mt (about 36.65 million barrels) of strategic
crude reserves, but the country is yet to begin construction on the facility.
China, meanwhile, has completed construction of one strategic reserves
terminal and is nearing completion of a second one.
Chinese state-owned oil giant Sinopec has almost completed construction
of the first 18 storage tanks at its Huangdao strategic oil reserve base in
Shandong province.
The 18 tanks at Huangdao, in the eastern Chinese industrial port of
Qingdao, have a total of 1.8 million cubic meters (11.3 million barrels) of
storage. The site is eventually expected to have a capacity of 3 million cu m.
Huangdao is one of four strategic oil reserve terminals planned under the
first stage of China's stockpiling blueprint. The other projects are the 5
million cu m Aoshan terminal in Zhejiang and the 3 million cu m Dalian
terminal in northeastern Liaoning province, which are still under
construction; and the 5.2 million cu m terminal at Zhenhai in eastern Zhejiang
province, which has already started accepting crude.
Once completed, the four terminals would have a total storage capacity of
16.2 million cu m (102 million barrels). The storage capacity is equivalent to
17.8 days of consumption, based on China's 2005 crude throughput of 286.22
million mt (5.72 million b/d).
So far, China has been tight-lipped about the ultimate size of the
reserves it intends to build, the source of funding for the reserves, and the
channels that are going to supply the oil to China.
According to some analysts, China has already moved between 60 million
and 80 million barrels of crude into the Zhenhai terminal.

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