Hong Kong (Platts)--13Nov2008

China has completed planning for the second-phase development of its
strategic petroleum reserve program, which will have a storage capacity of
26.8 million cubic meters (168.6 million barrels), the country's top economic
planning agency National Development and Reform Commission said.

The announcement was made along with the Chinese central government's
decision to start construction of a slew of energy-related projects in the
coming year, including a 10 million mt/year (200,000 b/d) greenfield refinery
in southwestern Sichuan province, the NDRC said in a statement published on
its website Tuesday.

Other new projects listed in the NDRC statement are nuclear power plants
in China's Fujian, Zhejiang and Guangdong provinces; a power transmission
network linking Sichuan province and Jiangsu province; a hydropower project in
Jiangsu; and the eastern segment of a 9,102 km (5,656 mile) natural gas
pipeline transmission system which will run from northwestern Ningxia Hui
autonomous region to Guangdong province and Hong Kong in southern China.

The infrastructure investment spree comes as part of Beijing's
wide-ranging effort to stimulate the domestic economy and stave off the
effects of the global financial crisis.

On November 9, the government unveiled a massive stimulus package worth
Yuan 4 trillion ($568 billion) to sustain growth as the Chinese economy slowed
sharply in the third quarter because of slowing exports and investment growth.

Gross domestic product grew 9.0% year on year in the third quarter,
compared with 10.1% growth in the second quarter and 10.6% in the first.

NDRC's Tuesday statement however did not give details on the sites the
government has selected for the second-phase strategic petroleum reserve.

The proposed 26.8 million cu m capacity is equivalent to 24.4 days of
China's average 6.9 million b/d crude throughput in the first nine months of
this year.

The Chinese government already operates four crude oil terminals with an
initial 16.2 million cu m (102 million barrels) of storage capacity under the
first phase of its strategic stockpile program. The terminals, which are
located in Zhenhai and Aoshan in eastern Zhejiang province, Huangdao in
eastern Shandong province and Dalian in northeastern Liaoning province, have
combined storage capacity roughly equal to 14 days of Chinese consumption at
current demand rates.

Meanwhile, PetroChina has already received approval from the government
to build a 10 million mt/year (200,000 b/d) greenfield refinery project in
Sichuan. The project is in addition to a 800,000 mt/year ethylene plant and
other downstream facilities the state-controlled oil giant has been developing
since 2006.