The tanks at China's first strategic oil reserve base station have started filling, a National Development and Reform Commission (NDRC) official has said.

The filling of the tanks, in Ningbo, Zhejiang Province, represent the latest step in the country's gradual effort to secure a strategic oil reserve, said NDRC secretary-general Han Yongwen.

But the challenges represented by the country's massive size could make building up a reserve difficult.

"Compared with Japan and other countries, China is late in developing its strategic oil reserves, and the size of the reserve is small," said Han.

"Given the country's huge population and vast territory, our reserve capabilities are still insufficient," he said.

China is the world's biggest oil consumer after the United States.

The government approved the construction of four national strategic oil reserve bases in 2004. The other three are in Daishan, also in Zhejiang Province; Huangdao, in East China's Shandong Province; and Dalian, in Northeast Liaoning Province.

It has been reported that the government plans to have a reserve of some 150 million barrels of oil.

Official statistics show China imported a record 145.18 million tons of crude oil last year, making it the world's largest oil importer after the US and Japan.

Zhu Hongren, vice-director of the NDRC's economic operation department, said the constraints in the country's coal, electricity and oil supplies were greatly relieved last year.

The nation's coal reserve was 144 million tons by the end of last year, of which 24.11 million tons were set aside for power plants, which was normal compared to the previous year, he said.

The country managed to ensure an adequate supply of refined oil, which has always been tight, he said.

Han said China would take the domestic situation into consideration when setting refined oil prices.

It had been reported earlier that the NDRC was planning to link domestic gasoline and diesel prices to the cost of crude oil in international markets, plus a fixed margin for domestic refiners.

Zhu said the tight in the markets for coal, electricity and oil would ease this year, but more "structural problems" would emerge.

(China Daily 01/30/2007 page3)