China to set up company to build oil reserve infrastructure
BEIJING: China plans to establish a company that will raise as much as 100 billion yuan (12 billion dollars) to build the country's strategic oil reserve infrastructure, state media reported.
Given China's inadequate storage facilities, growing demand, international price fluctuations and geopolitical instability, a strategic reserve was becoming increasingly necessary, the 21st Century Business Herald said.
Fund-raising has always been the greatest hurdle towards building strategic reserve infrastructure and this would be addressed by the new company, it said, citing sources from the National Development and Reform Commission (NDRC).
The newspaper reported that state-owned shares of the country's four major oil groups -- China National Petroleum Corp, China Petroleum Chemical Corp (Sinopec), China National Offshore Oil Corp (CNOOC) and Sinochem Corp -- may be injected into the oil reserve company as investment capital.
Another possibility is that the government may raise funds by levying market entry fees on oil companies who trade their goods on the oil products market, which has not happened before.
China is increasingly turning to oil imports due to strong domestic demand with total consumption expected to reach 308 million tons this year, the International Energy Agency (IEA) said.
It is not expected to have a 90-day oil reserve until 2015, Yang Qing, a researcher in the NDRC's energy research bureau, was quoted as saying.
Premier Wen Jiabao said last month that China must promote the sustainable use of oil and gas resources to maintain long-term, stable development.