The first batch at Huangdao — 12 tanks with 100,000 cubic metres of storage capacity each — was first ready for use last June and later had some technical upgrades to improve lightning-proof ability after one tank was struck by a bolt in August.
The tanks in the port city of Qingdao in eastern Shandong province have been idled so far and Beijing has not disclosed any plans when it may start injection or where it will secure the resource.
“The government may have many concerns to delay the use of tanks, but high oil prices are likely the main consideration,” the source said, asking not to be named due to sensitivity of the issue.
Zhang Guobao, vice minister of the country’s powerful economic planner and chief of the newly established State Energy Bureau, said in March that Huangdao and the fourth base of Dalian were near completion and would soon be put to use.
Huangdao, with capacity of nearly 20 million barrels, was previously scheduled to be ready for use by end-2008.
The world’s second-largest energy consumer already has two tank farms in operation in eastern Zhejiang province, one of which Beijing said late last year had been filled with 33 million barrels of oil.
The four bases, which together make up China’s first phase of strategic oil stockpiling, can hold 100 million barrels of crude, or around one month of imports.
Beijing has not yet decided on the scale or location of its second phase of strategic petroleum reserves, Zhang said last month.
The tanks have been managed by state-owned oil firms under a lease scheme, prompting concerns in the global market that China might operate its reserve differently from industrialised nations under the supervision of the International Energy Agency, which calls for stock draws only for emergencies.