Guangdong vies to join China's strategic oil reserve program

Asian Economic News, Feb 17, 2004

HONG KONG, Feb. 9 Kyodo

China's Guangdong is lobbying to become a site of the country's national strategic oil reserves in bid to help stabilize the oil supply of the southern province, the official China Daily reported Monday.

The Guangdong provincial government has proposed Huizhou, Maoming and Zhanjiang as candidates for the national oil reserve program's second phase, the state-backed English newspaper said.

''The establishment of oil reserves will safeguard the oil needs in Guangdong which have suffered a lot from the oil shortage,'' Zhang Lianbi, a researcher at the Guangdong Gas Trade Association, was quoted as saying.

''It is also expected to balance the oil price among private oil suppliers in the future.'' Zhang said.

Guangdong, which is the largest oil consumer in China, is expected to use 39.5 million tons of crude oil, most of which will have to be imported, by 2005, the news report said.

In the first phase of the national oil reserve program worth US$722 million, the central government in Beijing chose Aoshan and Zhenhai in eastern Zhejiang Province, Huangdao in northeastern Shandong Province, and Dalian in northern Liaoning Province to host at least 10 million tons of crude oil.

To encourage participation in the setup of the oil reserves in Guangdong, the provincial government is considering favorable policies, such as tax breaks, for private oil suppliers, the China Daily reported.

Li Jianhua, director of the Guangdong Provincial Economic Research and Development Center, reportedly said the province is also considering to build its own refined oil reserves to safeguard its huge consumption.