New Bureau of China's Petroleum Reserves: Rules have not yet established a complete process

As a specific implementing agency, how the oil reserve center should operate, what to do first, what to do afterwards, what can be done, how much capital there is, and who is the head, are obviously problems to be solved in the new stage.

Last year, the National Petroleum Reserve Center, which had been calling for "long-range calling," was finally introduced at the end of the year. Zhenhai Petroleum Reserve Base, which has been in trial operation for nearly a year, was also accepted by the state on the next day after the establishment of the center. The NDRC's news release concluded that the oil reserve work has entered a new phase.

The problem is that the "Regulations on the Management of State Petroleum Reserves" that had been hotly fired last year has not yet been introduced. The draft Energy Law is still soliciting public opinions. From the center to the base, the institutions of oil reserves have been placed there, and the rules have not yet been established.

New stage of oil storage

On December 18, 2007, the State Council Development and Reform Commission announced that the National Petroleum Reserve Center was established on the same day.

The press release issued by the National Development and Reform Commission revealed that the new agency is responsible for the construction and management of the national oil reserve. Specifically, the National Petroleum Reserve Center is the executive layer in China's oil reserve management system. Its purpose is to provide oil reserve protection for the maintenance of national economic security. Its duty is to exercise the rights of contributors, to be responsible for the construction and management of the national oil reserve base, and to assume strategic petroleum reserves. Collect, store, rotate and use tasks to monitor changes in supply and demand in the domestic and foreign oil markets.

According to a reporter from China News Weekly who learned from the oil industry, this institution is a bureau-level institution and is likely to operate in the form of a company. According to the insider of the Development and Reform Commission, the oil reserve center will operate according to the state grain reserve. The oil reserve base currently operating in Zhenhai has already operated as a limited company.

"It looks a bit like the National Development Bank in the financial sector in the oil sector." Han Xuegong, an oil industry expert, said in an interview with a reporter from China News Weekly that "oil reserve centers are not profit-making."

Cao Xiao, deputy chief engineer of the Institute of Economics and Technology of Sinopec, said in an interview that, unlike the National Petroleum Reserve Office, the former is a government department, and the National Petroleum Reserve Center is the executive agency responsible for the relevant fields. The operating funds of the Petroleum Reserve Center will come from government financial allocations. The center can purchase reserve oil through different channels, not just from the three major groups of PetroChina, Sinopec and CNOOC.

Zhenhai Petroleum Reserve Base is currently entrusted by the National Development and Reform Commission with the construction and management of Sinopec. This means that the newly established oil reserve center does not directly perform the management of the reserve base. Instead, it cooperates with petrochemical groups such as Sinopec and PetroChina and entrusts the three major state-owned enterprises to conduct management. "They gave us money on the line," said a Sinopec official.

"Sinopec and PetroChina have the technology and equipment. There is no need to set up another team," said Han Xuegong.

The news of the announcement of the establishment of a national oil reserve center on December 18 made many people puzzled. "The statement of the Reserve Center has been there for the past few years. Why does it happen at this time?" Professor Cha Daojun, a professor at Peking University and an expert on energy security, said in an interview. "In addition to offsetting changes in oil prices, strategic oil reserves also mean the possibility of supply disruptions. But where is this possibility?"

According to the investigation of Tao, the representatives of China and India attended the high-level meeting of the International Energy Organization in Paris in December. The response to the sudden energy crisis was one of the main topics discussed at the current meeting. "The news that the government has announced the establishment of an oil reserve center does not rule out the need to respond to the requirements of the International Energy Organization." Cha Daojun said, "Since 1994, when the International Energy Organization came into contact with China, the main topic was oil reserves."

In addition, he believes that it is now high oil prices, and China's announcement of the establishment of an oil reserve center may generate an information premium. However, Cao Xiao believes that the establishment of the center does not mean that China has taken the action of oil reserves and will not bring about fluctuations in oil prices in the international market.

Complete process

The oil reserve center has been established, and the reserve base has been accepted, but the National Development and Reform Commission has not announced the oil reserve management regulations.

In March last year, it was reported that the "Regulations on the Management of National Petroleum Reserves" had entered the legislative plan of the State Council and appeared as a substitute for the "National Petroleum Reserve Law."

At the beginning of last year, the Development and Reform Commission organized a task force to conduct research on reserve policies. From February 20 to March 3, the National Development and Reform Commission also organized a research group to conduct a field visit to some of the EU countries’ oil reserve policies. The survey results were officially published in February 2007. The distinguishing feature of EU countries from other countries such as the United States is that the reserve entity is a company rather than a government, and it is a system without government reserves. Obviously, it will take a period of time from research to policy formation.

In March 2007, Ma Kai, director of the National Development and Reform Commission, said at a press conference at the Fifth Session of the Tenth National People's Congress that China’s oil reserves include government reserves and corporate reserves. Ma Kai’s statement was reflected in the draft “Energy Law” published in early December. Chapter 7 of the “Energy Law” publicly solicits public opinions. Chapter 7 of the Energy Reserve specifically lists the construction and management of petroleum reserves in Article 65. The government’s reserve for petroleum is organized and managed by the State Council’s energy authority.

The petroleum's corporate obligatory reserves are established by enterprises engaged in crude oil import, processing and sales operations as well as refined oil import and wholesale operations. At the same time, the Department of Energy under the State Council has established a supervision and inspection system for petroleum reserves, and has supervised and managed the construction of the government's reserves and corporate obligatory reserves, storage, rotation, and other conditions.

Obviously, after the introduction of the "Energy Law", this clause will probably become the basis for future strategic oil reserve management regulations.

In fact, before the establishment of the National Petroleum Reserve Center, there was no real national reserve in China. At the same time, according to Cao Xiao, a petroleum expert of Sinopec Group, he said that in the past, China did not have a so-called corporate obligation reserve, nor did it have corresponding laws and regulations. The oil reserves of the three major oil groups were only used for the turnover of commercial nature reserves.

According to Han Xuegong, whether the "Energy Law" can be passed, how the relevant framework of the "State Assets Law" is determined, and the adjustment of the ministry's institutions and personnel changes next year will all bring new variables to the management of oil reserves. Therefore, it is not yet possible to determine the final plan of this approach.

But at the same time, he also stated that "the specific operations cannot wait," and that some of the internal documents that the National Development and Reform Commission currently has will serve as a temporary basis for the operation.

In fact, under the international context, the issue of China's energy reserves has already affected the major issues in the international energy field.

According to Han Xuegong, China’s oil consumption this year is about 350 to 360 million tons, while domestic production is only 180 million tons, which means that China’s oil imports have reached 50%.

According to Han Xuegong, according to international practice, the number of days of national oil reserves is generally 90 days, which is equivalent to one quarter. It will take a long time for China to reach this reserve capacity. As far as the actual situation of the reserve base is concerned, it is not easy to achieve real discharge of oil in the first batch of bases.

Therefore, whether it is a management system or a practical measure, there is still a process for China’s oil reserves to be truly complete.