Others News
- Nation to bolster oil stockpile levels
Date: 13-Apr-2007 Sources: (Shenzhen Daily)
THE government expanded plans to bolster energy supply security by accelerating the build up of oil reserves as the country faces flattening production growth and trimmed its target for relying on clean but costly natural gas.
In a five-year energy strategy note that normally comes a year after its economic plan, the government will soon require oil firms to keep minimum levels of crude stocks and reiterated a call to speed up building government strategic oil tanks. But it appeared to lower a target for the share of gas in its energy mix by 2010.
The move may cause a spike in demand for imported crude from the world's second-biggest consumer, which is already buying nearly half its oil overseas, though it could signal less demand for liquefied natural gas (LNG), as China aims to hasten a move toward market-based natural gas prices.
'The drastic volatility in global markets is increasing security concern,'the National Development & Reform Commission (NDRC) said in its report on the 2006-2010 sector development plan posted on its Web site.
'Our nascent national strategic reserve system is too weak to cope with supply disruptions,'the top economic planner added.
The government has not yet set a compulsory stock level for dominant State refiner Sinopec Corp. and PetroChina, which normally hold inventories that roughly cover only two weeks of sales. Oil firms in Japan, the world's third-largest oil user, are required to store oil to meet 70 days' worth of consumption.
China, the world's sixth-largest oil producer, is building the first phase of its strategic reserve tanks on the eastern seaboard that is projected by 2009 to store 100 million barrels if used in full, or about two weeks' worth of oil at the current consumption rate. It is also planning a second phase.
Its first tanks in Zhenhai have a capacity of 33 million barrels and by March. China has discharged more than 4 million barrels above that level into the storage, which industry sources said signalled it had released some of its stocks back into the market.
The planner set 2010 crude production at 193 million tons, or 3.86 million barrels per day (bpd), an increase of 5 percent from 2006, as production in the country's main eastern fields reached a peak. Frontier regions have proved costly to explore.
The output target implies growth of only 1.25 percent in domestic production over the next four years, weaker than 2006's 2 percent increase and down from 4 percent in prior years, amid concerns about stagnation in the country's ageing oilfields.
China would apply new technologies and increase investment to boost production, with a plan to speed up offshore drillings, the NDRC said, without providing an estimate of investment needed.
New technologies are aimed at maintaining a crude recovery ratio at about 32 percent, a rate representing the amount of oil to be pumped based on proven reserves, it said.
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