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High oil prices may delay China filling oil reserves: analyst
AFP
BEIJING
Petroleumworld.com 06 29 07High international oil prices may have forced China to postpone filling at least one of its much-anticipated strategic oil reserves, analysts said Thursday.
"The government would prefer to start filling them when oil prices are comparatively low," Yang Wei, a Shanghai-based oil analyst with Guotai Junan Securities, told AFP.
"It makes no sense for China to push the price to rise further when it is at a period high now."
He pointed out that oil prices had reached 70 dollars per barrel from below 60 dollars per barrel at the beginning of the year.
The state-run China Daily Thursday cited an unnamed official with Sinopec, Asia's largest refiner, as saying the company would kick off the filling of the Huangdao strategic oil reserves in the country's east by the end of 2007.
This could suggest a delay as the company said previously that it would happen by the middle of this year.
China has earmarked four locations for its strategic oil reserve, meant to insulate it better from supply shocks or steep price fluctuations.
Gideon Lo, an oil analyst with DBS Vickers in Hong Kong, agreed that international oil prices were a concern.
"Although construction on the strategic oil reserves can comply with a planned timetable, the timing of filling them is subject to factors in the market, for example, oil prices, as (China) needs to import overseas crude to do so," he said.
Beijing-based independent oil analyst Han Xuegong added that it would be up to the State Council, or cabinet, to decide when to fill the strategic oil reserves as the coordination of government departments is needed.
"Even though construction of the strategic oil reserves has been completed, or will soon be completed, companies will still have to wait for government instruction as for when to fill them," he said.
Sinopec was not available for comment when contacted by AFP on Thursday.
China, the world's second-largest importer of oil, has seen its demand for energy rocket as a result of its explosive economic growth, which has been double-digit for four consecutive years.
It has been a net importer of oil since 1993, and imported 138.8 million tons of crude in 2006, up 16.9 percent from the previous year.
Imports last year accounted for 47 percent of the country's overall consumption and industry observers warned imports might make up more than 50 percent of China's petroleum needs in a year or two, Xinhua added.
The Middle East has traditionally been China's main source of oil, but after its vulnerability was highlighted in the second Iraq war, it has sought to seek energy elsewhere in the world.
AFP 28 1005 GMT 06 07
Copyright© 2007 AFP. All Rights Reserved.
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