The project, worth some $1 billion as reported earlier by state media, will make Vopak one of a few foreign firms involved in the huge oil storage business long dominated by the country’s state oil companies.

The world’s No. 2 oil consumer is accelerating the building of oil infrastructure from tanks to pipelines, both by the government and companies, to set up a supply buffer as its dependence on imports is set to surge from around 50 percent.

Construction of the Vopak facility, to be built in China’s southernmost Hainan island, will start in the second half of this year after it has obtained Beijing’s approval, said Shi Zhen, head of the Investment Promotion Bureau of Yangpu Economic Development Zone.

The facility includes 5 million cubic metres (about 32 million barrels) of storage tank capacity for both crude oil and refined fuel, a 300,000-tonne crude terminal and smaller berths for oil products.

Xu Jin, Vice President of China business development for Vopak, told a seminar in Hainan that his firm picked Hainan due to its strategic location, close to a new refining and petrochemical base as well as consumers.

The 32 million barrels of capacity, equivalent to 5 days of Chinese crude imports, is equivalent to the total capacity the Dutch firm has built in Asia, including Singapore, Malaysia, Thailand, Japan and South Korea, according to Vopak’s website.

Vopak’s China investment has so far focused on smaller tanks to store mostly chemicals.

Its vast investment in Hainan is a tie-up with China’s State Development & Investment Communication Corp, a unit of State Development and Investment Group which specialises in building roads and bridges.