The port of Yangpu at Haikou in the southern Chinese province of Hainan may soon have a new oil terminal to accommodate VLCCs as part of state plans to develop Yangpu into an oil storage hub.

 
Oil storage specialists Royal Vopak is reported to be embarking on a $1-billion project to develop tank and wharf loading facilities, with China’s State Development & Investment as joint venture partners.
 
It is unclear the exact shareholding structure of the JV although reports say construction is slated to begin before the end of the year.
 
First phase construction is scheduled to include development of a 300,000-dwt and 100,000-dwt oil and chemical products terminal, and tanks with total storage capacity of 1.2 million cubic metres (m³).
The facilities are to be located in Hainan’s Yangpu special economic development district also known as the Yangpu Bonded Harbour Area.
 
According to one source, the Chinese government wants two to three 300,000 dwt oil terminals along with two 50,000 dwt terminals and tanking with capacity exceeding 5 million m³ in the Yangpu special economic development district.
 
Portworld in October 2007 quoted Chinese provincial officials for Hainan announcing plans to build 10 million m³ worth of oil storage facilities in the Yangpu Bonded Harbour Area.
 
Hainan Vice Governor Jiang Sixian said then that, according to China’s preferential tax policies on bonded ports, ships carrying crude oil that dock at Yangpu would face no import duties, no transfer taxes and no VAT.
 
When the planned storage facilities comes on stream, it will become the closest oil storage hub in China to the Straits of Malacca.
Yangpu is currently home to the only 300,000 metric tonnes (mt) crude oil terminal in southern China, and houses an eight million mt refining project run by Sinopec.
 
Jiang highlighted Yangpu’s preferential tax status as being “important to regional economic development and national energy strategies.”
 
He said it would advance economic development with ASEAN member states.
“Yangpu Bonded Harbor Area, now a large petrochemical production base, will become an important international base for processing and export of petrochemical commodities,” he added.
 
China and ASEAN are seeking to establish a free trade area by 2010.
China’s other designated free-trade or special economic development areas (preferential tax-zones) include Shanghai’s Yangshan Bonded Harbour Area, Dongjiang Bonded Harbour Area in Tianjin, Dalian’s Dayaowan Bonded Harbour Area and Ningbo’s Meishan Bonded Harbour Area.
 
Regional authorities have been pushing to create preferential tax zones in order to allow favourable tax regulations for investors including wholly tax-free programs.
 
Several Chinese central government officials have praised the preferential tax zones as being important to regional economic development as the bonded ports would advance trade volumes with neighbouring economies.
 
The Dayaowan Bonded Harbour Area at the Dagushan Peninsula in the northeastern part of Dalian, for example, has been called a major step towards forming a free trade zone between China, Japan and South Korea.