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To: Wyätt Gwyön who wrote (21780)	11/15/2004 2:19:15 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

China to Build Strategic Oil Reserves 11/15/2004 11:24:00 AM IEA: China to Build Strategic Oil Reserves The International Energy Agency expects China to start establishing strategic oil stocks in 2005 to provide a stable supply of petroleum to the domestic market. "My understanding is China was using the year 2004 to actually build the tanks, and it is prepared to fill them progressively starting the year 2005," Claude Mandil, executive director of the Paris-based energy watchdog said in an interview Monday. Mandil said that China, which is not a member of the IEA, has agreed to cooperate with the agency in case it has to use the reserves. The Organization for Economic Cooperation and Development has recommended that its members hold reserves equal to at least 90 days of net imports. Japan and South Korea, which are members of the OECD, already have strategic oil reserves. Mandil said non-OECD Asian countries, particularly China and India, need them as well. India has also decided to build reserves. He said the IEA has held a series of talks with the Chinese government on strategic oil stockpiling as well as other energy issues, including China's efforts to liberalize its electric power industry. Mandil said China should purchase oil for its strategic reserves "step by step" because a large purchases over the short term could push up global crude prices. Such a move also would impose a heavy financial burden on China, he said. "China should start building stocks when it thinks prices have gone down to low enough levels ... what I can say is due to the fundamentals, oil prices should go down again in the coming months," Mandil said. Mandil said he expects China to take several years to raise its stock levels to 90 days of net imports. According to the IEA's latest outlook, China's oil imports should rise to 10 million barrels a day by 2030 from about 2 million barrels a day now. Mandil was in Tokyo Monday to give a briefing on the agency's world energy forecast.