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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, is a symbolic step in the country's gradual effort to secure a strategic oil reserve, said NDRC secretary-general Han Yongwen.

However, building up reserves for a country the size of China will be highly challenging.

"Compared with Japan and other countries, China is a latecomer 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."

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

Four national strategic oil reserve bases were approved by the government in 2004. The other three are located in Daishan, Zhejiang Province; Huangdao, Shandong Province; and Dalian, Liaoning Province.

It has been reported that the total reserve should number 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 on the country's coal, electricity and oil supplies saw great alleviation last year.

The nation's coal reserve stood at 144 million tons by the end of 2006, with 24.11 million tons earmarked 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 previously been in tight supply, he said.

Han said China would consider the domestic landscape 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 international crude oil prices, adding a fixed margin for domestic refiners.

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

(China Daily January 30, 2007)