China To Develop Strategic Oil Reserve Bases By 2008
China plans to begin storing oil at its first strategic oil base by the end of this year and put into operation three more bases by 2008, a senior official said on Monday.

The first oil reserve base is under construction at Zhenhai, in the eastern province of Zhejiang, and will begin filling tanks by the end of 2006, Ma Kai, minister for the National Development and Reform Commission, told reporters.

Three more bases will be brought into operation during 2007 and 2008, Ma said on the sidelines of the ongoing National People's Congress (NPC), China's nominal parliament.

The National Development and Reform Commission, China's top economic policy body, last month said the country needs to increase refining capacity and raise prices of oil-based products.

The commission warned that existing refineries were 'stretched to the limit' and need to process and extra 17 million tons of oil to meet demand.

'Low refined-oil prices and a fragile supply system are major problems facing China's refining industry,' the official Xinhua news agency quoted the commission as saying in a report.

China's oil demand is expected to rise about 6 per cent this year, the report said.

Despite the high demand, China's oil refining industry lost about 30 billion yuan (3.7 billion dollars) last year, compared with a profit of 20.8 billion yuan in 2004.

Refining capacity reached 328 million tons, an increase of 14 million tons from 2004, the commission said.

About 286 million tons of crude oil were processed last year, 17.6 million tons more than in 2004, it said.

China imported 165 million tons of crude oil last year, almost the same as in 2004. But soaring prices raised the cost of the imports by about 32 per cent to 60 billion dollars, the commission said.

The NPC is scheduled to approve a five-year economic plan at the end of its 10-day session on March 14.