Demand did not fuel prices, says China

China today said the growth in its oil consumption was not responsible for the surge in international oil prices. It plans to start filling its strategic reserves from next year to meet the rising demand.

Zhang Xiaoqiang, vice chairman, National Development and Reform Commission of China, said at the first roundtable of Asian oil producers and consumers that as a major net oil importer in Asia it had suffered great loss due to the high oil price.

"Although China's oil import has increased in the recent years, it takes a mere 6 per cent of the world's total oil trade volume and the share of imported oil in the country's oil consumption mix is less than 40 per cent," he said.

"The Chinese government put great emphasis on oil market stability and oil supply security, adopting measures accordingly," he said adding that China's total oil consumption reached 266 million tonnes, with net oil import amounting to 97.41 million tonnes.

In 2004, China's oil production is estimated to reach 174 million tonnes. He said China would witness a growth in oil import with net import volume exceeding 130 million tonnes.

Chinese oil demand is expected to keep growing at or above forecast GDP growth of 8 per cent this year. The country imports more than 40 per cent of its crude needs, which is expected to grow further.

A storage capacity of 10 million barrels on the east coast is expected to be ready for use in August, the first phase of a strategic petroleum reserve of 150 million barrels planned for completion in three to five years.

The country's oil companies usually hold 10-30 days of oil stocks as part of commercial operations, but China has become increasingly concerned over the last couple of years due to a emergency reserves.

Xiaoqiang said strengthening oil sector cooperation, information exchange and communication in Asia improve the stability in international crude prices.