Daily Management Review

China is Building Underground Oil Reserves


China is creating underground storage facilities that can accommodate up to a quarter of the expanded strategic oil reserves by 2020. This should reduce cost of the process of creating storages, which typically are expensive and take up too much space in the densely populated coastal areas.

Ikar.us via wikimedia
Ikar.us via wikimedia
The authorities of China are seeking to enhance the country’s energy security and to take advantage of cheap oil. That is why Beijing has already spent billions of dollars to establish strategic petroleum reserves (SPR). For that, the authorities need to stock up amount of oil enough for 90 days in the event of a complete cessation of imports.

Most Western countries often publish data on the SPR, but China seldom provides the public with this information.

Previously, almost all storages were located above the ground, but now experts have found at least five underground storage facilities, and four are under construction, Reuters reported citing local media and analysts.

Experts point out that the government is committed to making the SPR system diverse, since it increases factor of safety.

Despite the cost of creating the underground structures and need for drilling, construction of underground SPR may be up to 75% cheaper compared to ground reservoirs, mainly due to cost of land in coastal areas and facilitated safety measures.

Structural engineering are faster to build, but undergrounds are cheaper, they have smaller environmental risks and are more secure.

About 130 million barrels are planned to be stored underground, which would be nearly a quarter of the target SPR level of 550 million barrels, to be achieved by 2020.

source: reuters.com