China is accelerating the pace of constructing a strategic oil reserve base, according to the State Development and Reform Commission.
China’s economic growth has become more and more dependent on crude oil in recent years, and its energy shortage is acute.
The country imported more than 97 million tons of crude oil in 2003 and its dependency on imported oil reached 37%. China’s crude oil storage capacity was more than 38 million tons in 2002, but theoretically the storage capacity is only enough for less than 30 days.
In line with common international practice, the long-term strategic oil reserves should be equivalent to the amount of 90 days of imports. However, after China’s four major oil reserve bases in Dalian, Huangdao, Zhenhai and Zoushan go into full operation, their combined storage capacity will be equivalent to the amount of only 30-day import.
China expects to consume 308 million tons of crude oil, refine 270 million tons, and import 120 million tons this year. Its dependency on fuel oil imports rose to 53% in 2003. In 2004, fuel oil consumption is expected to reach 48.5 million tons this year, and imports will be 23 million tons. China’s import of fuel oil rose 69% in the first four months of this year as against 44% last year.
In addition, China’s consumption of diesel oil for power generation and transportation has soared in recent years. The electricity shortage has stimulated the use of more diesel oil in power generation. The use of oil in farm production is also on the rise.
The amount of diesel oil consumed increased to 84 million tons in 2003 but the market supply still could not meet the demand.
China is expected to consume 95.5 million tons of diesel oil this year, while its exports will be less than last year. China’s imports of diesel oil was 400,000 tons in the first four months of year, and will chalk up a record 1.2 million tons for the entire 2004.