China Has Emergency Oil Tanks at Shanshan, Jintan, OGP Says

China is setting up emergency oil- storage facilities at Shanshan in western China, Jintan and Zhoushan in the east and Huizhou in the south, according to China Oil, Gas & Petrochemicals.

The four centers are part of the second phase of the country's strategic petroleum reserves program, which is expected to bring national crude-storage capacity to 270 million barrels when construction of all tanks is completed at the end of the year, according to the e-mailed newsletter by the official Xinhua News Agency.

China, which relies on imports for more than half its crude demand, plans to bolster energy security and reduce the impact of global oil-price fluctuations by accumulating emergency supplies in a three-phase program. The four bases are part of a list of eight that OGP wrote will make up the second-phase development. The other four have been reported by the government and state oil companies.

Shanshan in the western Xinjiang province is being built by China National Petroleum Corp. and will have a capacity of 8 million cubic meters, or 50.4 million barrels, OGP reported. The facility, which was started up at end-2008, may be filled with oil from Kazakhstan, according to the newsletter.

Jintan in the eastern Jiangsu province is an underground facility that can hold 3 million cubic meters of oil, OGP reported. CNPC is building and will operate the site, according to the newsletter.

High-Sulfur Crude

The Zhoushan project in the eastern Zhejiang province is a 2.5 million cubic-meter expansion of an existing 5 million cubic-meter facility in the first-phase program built by Sinochem Group, according to the report.

The Huizhou facility is able to store 5 million cubic meters of crude, possibly from the Middle East and Africa, in natural underground caves, OGP published. China National Offshore Oil Corp. is the builder and operator of the base, the newsletter reported.

China started buying higher-sulfur crude to bolster its emergency oil reserves, China Business Journal reported on Feb. 25, citing people involved in the purchase that it didn't name.

All the tanks in the second phase are able to store higher- sulfur crude, according to the newspaper.

The other bases in the second phase are at Dushanzi in Xinjiang, Lanzhou in Gansu, Jinzhou in Liaoning and Tianjin municipality, according to government and oil-company reports.

China's third-phase crude-reserves program may be completed by 2020 and will raise total capacity for state inventories to 500 million barrels, OGP reported.

The nation finished filling the four bases in the initial phase in 2009 with about 103 million barrels of oil