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Guangdong Province, China's economic powerhouse, may soon play host to new national oil reserve bases.

The central government has been assessing the plan to ease Guangdong's energy shortage, according to provincial energy officials. Guangdong consumes nearly one-third of the country's annual oil import.

"We had the plan to ensure the province's energy security by becoming involved with the country's oil strategy reserve program," Xie Zhuoqun, energy division director of the Provincial Development and Reform Commission told China Daily yesterday.

The State Council Energy Leading Group refused to comment on the plan, only saying the country has started to choose new sites for oil reserve bases after completing the four it decided upon in 2005.

None of the sites have been related to the Pearl River Delta, which produces nearly one-tenth of China's economic output. Three of them are in East China's Zhejiang and Shandong provinces, while the other is in Northeast China's Liaoning Province.

Provincial think-tank researchers said the plan is important to sustain regional economic development.

"The reserve plan can help ensure the economic security of the delta, which mainly relies on the importation of raw materials and energy to sustain its development," said Zhou Yongzhang, director of Centre for Earth Environment and Resources of the Guangzhou-based Sun Yat-sen University.

Zhou, a member of the Guangdong Provincial Committee of Chinese People's Political Consultative Conference, said the plan has been a hot topic during its annual session that ended this weekend.

He suggested that environmental impact assessments should be done to prevent any unforeseen difficulties before launching the massive project.

Chief of the Provincial Development and Reform Commission, Chen Sanru, said last week that the provincial government has planned to start construction of the oil strategic reserve bases in Maoming and Zhanjiang this year, with a total investment of 5 billion yuan (US$625 million).

The bases, which should be complete by 2010, will store 10 million cubic metres of crude oil and 2 million cubic metres of refined oil.

The planned strategic reserves will satisfy a half-year's demand of the province, while currently oil storage in Guangdong can feed the province for only a week, according to industry insiders.

With a more than 40 percent dependence on oil imports, China has started to set up a strategic oil reserve to reduce the impact brought by the fluctuation of international oil prices.

But the size of China's oil reserve has still not been officially declared.

"This should be determined by China's real conditions," said Zhang Guobao, vice-minister of National Development and Reform Commission.

On average, developed countries like Japan and the United States have stored oil equal to 90-120 days of consumption.

Upon completion of the first round of four national bases in 2008, China's oil reserve will be equal to 35 days of consumption.

(China Daily March 1, 2006)