China plans to build four levels of crude oil reserves made up of two parts - the government reserve and enterprise storage - according to a source with the nation's largest oil company.

"The government reserve will be at two levels, a strategic crude oil reserve base by the central government, and an oil reserve base by local governments," an official with PetroChina, who declined to be named, said.

"The enterprise storage will also be at two levels, commercial oil reserve by the largest oil companies PetroChina, Sinopec and CNOOC, and oil storage by the medium and small ones," he said.

The strategic oil reserve base by the central government and the oil reserve by the nation's leading oil companies are under way, and the other two levels are still in the preliminary stage, the official said.
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The country also plans to formulate some regulations for oil reserves, he said.

"A sound oil reserve system will help ensure the nation's energy security, in case there is an interruption in supplies or a hike in oil prices," Han Xiaoping, chief information officer of China5e.com, said.

In some regions that are hungry for energy such as South China's Guangdong Province, the local government has started to plan for oil reserves, Han said.

China is now the world's third largest oil importer after the United States and Japan and the world's second largest oil consumer after the US. In the first half of this year imports of crude oil rose 11.2 percent to 81.5 million tons, according to the General Administration of Customs (GAC).

Last year, China imported 145 million tons of crude oil and 36.4 million tons of refined oil, spending $15.3 billion more than the year before because of soaring oil prices in the global market, the GAC said.

Analysts said China will use up to 350 million tons of oil this year, 10 million tons more than last year.

Beginning in 2004. China started to build its strategic crude oil reserve bases in three provinces. The first batch consisted of four bases, two in Zhejiang, one in Shandong, and the other in Liaoning.

Last month, PetroChina started to build a commercial crude oil reserve base in Liaoning. It plans to build another in the Xinjiang Uygur Autonomous Region.

Other top oil companies, such as Sinopec and Sinochem, have also started to build bases, a PetroChina official said.