Chinese oil companies to set up reserves

China may ask state-owned energy companies to establish oil reserves as a supplement to a national reserve being set up as the Asian giant struggles to fuel future growth, state media said on Thursday.

The requirement is expected to be included in a new Energy Law which could be reviewed by the State Council, or Cabinet, by the end of the year, the China Daily reported. “We are seriously weighing the option of constituting national oil reserves, both at the strategic and commercial level,” Wu Zhonghu, one of the core law drafters, was quoted as saying.
Analysts voiced concerns that corporate reserves for strategic purposes could be a huge burden for private companies who are supposed to be in the business of making money. “It’s very costly in terms of working capital and in terms of (price) risk for private companies to hold inventory,” Tony Nunan, a Tokyo-based oil analyst at Mitsubishi’s international petroleum business, told AFP.

The News