CHINA welcomes private investment in the construction and operation of strategic oil reserve facilities, according to draft rules issued by the National Energy Administration (NEA) on Tuesday.

    China, the world’s largest energy consumer, will also require companies to maintain compulsory oil reserves, the draft rules said. They must keep these separate from their commercial reserves and the compulsory reserves can only be used at the direction of the State Council.

    The government will determine the size of strategic oil reserves based on actual oil consumption, according to the rules published on the NEA website.

    China is expected to add 70-90 million barrels to its strategic crude oil purchases in 2016 as it takes advantage of the battered oil market, a Reuters survey has shown.

    By mid-2015, China had stockpiled about 190.5 million barrels under its strategic petroleum reserves (SPR) program — roughly one month of net crude oil imports. The government’s goal is eventually to stockpile reserves worth 90 days of net imports.

    In the draft rules, the government defines the country’s State petroleum reserves as including government stockpiling and companies’ compulsory stockpiling reserves.

    The draft rules did not specify the level of inventory companies are required to maintain.

    China’s stockpiling program has so far been led largely by energy giants Sinopec and CNPC, with ChemChina recently striking a deal with privately run CEFC China Energy to lease out tanks in the southern island province of Hainan.

    Approval to use the country’s strategic oil reserves must come from the State Council, the draft rules stipulated.

    The NEA is seeking public feedback on the draft rules until June 18. (SD-Agencies)