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By Wan Zhihong (China Daily)
Updated: 2007-12-19 07:19

A center to manage the country's strategic oil reserves was set up Tuesday, the top economic planning agency said.

It will serve as the administrative body for the nation's oil reserve system and take charge of stockpiling crude and releasing reserves, a statement from the National Development and Reform Commission (NDRC) said.

The center will also monitor oil supply and demand on the domestic and international markets, and enhance China's energy security, it said.

Han Xiaoping, an energy analyst with Beijing Falcon Pioneer Technology Co Ltd, said: "A sound oil reserve system will help offset oil supply risks when there is an interruption.

"It will also reduce the impact of fluctuating global oil prices on the domestic market."

China is the world's second-largest oil consumer after the United States.

The country imported 145 million tons of crude and 36 million tons of refined oil last year, figures from the General Administration of Customs showed.

It began to build strategic oil reserves in three coastal provinces in 2004.

The first batch comprised four bases, in Dalian, Qingdao, Ningbo and Zhoushan.

The bases in Ningbo and Zhoushan began stockpiling last year, while the other two are expected to start operations within a year, sources close to the project told China Daily.

By the end of 2010, China plans to have 12 million tons of strategic oil reserves, NDRC sources said. Current strategic oil reserves are put at between 2 million and 3 million tons.

NDRC Vice-Minister Chen Deming said earlier that by 2010, China's oil reserves will be equivalent to one month of net imports of crude oil.

By 2020, the volume will have increased to the equivalent of three months' imports, he said.

Last month, the authorities started to develop a strategic oil reserve in the Wanzhou district of Chongqing Municipality. It will form part of the second phase of the national strategic oil reserve plan.

NDRC sources said that on completion of the second phase, the country will have capacity for 28 million tons of oil reserves.

Authorities in several provinces, including Guangdong and Hainan, are currently in discussions with the central government to build strategic oil reserves in their regions.

Han said the central government will not limit strategic oil reserves to the eastern region.