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US Encourages China to Build a Strategic Oil Reserve - 2004-10-19


The United States is encouraging China to build its strategic oil reserves because of concerns that the country's rapidly increasing energy demands may threaten the stability of world oil markets.

China's economic boom has put more than five million new cars on the roads this year, helping its oil imports to surge by 37 percent in the past 12 months.

This ravenous hunger for oil has triggered concerns in the United States and Europe over what will happen if a crisis disrupts the world oil supply.

Alan Larson, U.S. under-secretary of State for economic, business and agricultural affairs is visiting Beijing. While his trip is focusing on agricultural trade with China, on Tuesday he mentioned Washington's concerns over energy security to Chinese officials.

"We think that as China grows as a consumer and importer of oil, it will be important for China to have such stocks and to be prepared to use them cooperatively with other oil importing nations," he said.

Chinese state-run media last month reported the government plans to set up a company to build a strategic oil reserve infrastructure at a cost of $12 billion.

However, analysts say developing the program promises to be slow.

Aside from the high cost of establishing a petroleum reserve, one big obstacle is that China has yet to build adequate storage facilities.

Officials with China's National Development and Reform Commission, a planning agency, say it may be 10 years or more before China is able to store a 90-day emergency supply of oil.

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