Sept. 13 (Bloomberg) -- China, the world's second-largest oil consuming nation, will delay purchases of the fuel for its emergency stockpile because prices soared to records, a government official said.

``I can tell you clearly, we are not going to buy now,'' Zhang Guobao, vice chairman of the National Reform and Development Commission, China's top economic planning agency, told reporters in Beijing today. The government had planned to start filling the stockpile by the end of this year.

The nation's soaring demand helped push oil prices to all- time highs this year, prompting concern that any stockpiling would bolster prices further. China wants to secure energy needs as it becomes more reliant on imports to maintain the world's fastest-growing major economy. The strategy emulates programs in the U.S., Japan and India.

China will complete within three years an emergency reserve to meet 30 days of demand, Wang Jiming, vice president of China Petrochemical Corp., China's largest refiner, said in an interview in Beijing on Dec. 8.

``We are studying and trying to find other ways to build our oil inventory on a gradual basis,'' Zhang said. ``We have mapped out a plan to build our oil inventories and related facilities are under construction. We are yet to decide.''

Stockpile Decision

The decision whether to build a stockpile to cover 90 days of consumption or 120 days hasn't been made, Zhang said. China's oil consumption has more than doubled in a decade to an estimated 6.65 million barrels a day in 2005, according to the International Energy Agency. The proportion met by imports has risen from zero to about 44 percent.

``The basic policy for China's energy industry is to rely on domestic supply,'' Zhang said. ``China is able to maintain production of crude oil at around 180 million tons a year over the next 20 years,'' or about 3.6 million barrels a day, he said.

Oil prices have more than tripled since November 2001, adding pressure on Asian governments from India to Indonesia to reduce subsidies and price controls. Crude oil rose to a record $70.85 a barrel on the New York Mercantile Exchange on Aug. 30.

The International Energy Agency on Sept. 9 cut its estimate for 2005 world oil demand growth for a third month as record-high fuel prices curb sales in China, Thailand and other developing countries.

Global consumption growth was lowered by 250,000 barrels a day, the Paris-based IEA, an adviser to 26 oil-consuming nations, said in its monthly Oil Market Report last week. China, India and the rest of Asia accounted for 68 percent of the reduction.

Four Tanks

In China, fuel-price caps prevented refiners such as China Petroleum & Chemical Corp., a unit of China Petrochemical, from passing higher crude oil costs to customers.

In the first stage of China's emergency stockpile project, four storage tanks will be completed within three years in the coastal cities of Dalian, Qingdao, Zhenhai and Zhoushan, holding enough oil for about one month of consumption, China Petrochemical's Wang said on Dec. 8. The reserve would be expanded in stages to 90 days by 2010.

The facility in Zhenhai in China's eastern province of Zhejiang will be the first of the four sites to be completed, with capacity for 9.5 million barrels of oil by August next year for use in emergencies, Shanghai-based Merrill Lynch analyst Bin Guan said in a Nov. 30 report. It would have 16 tanks and will be expanded to 64 capable of storing 38 million barrels by the second half of 2006, he said. Nationwide emergency storage capacity may rise to 150 million barrels by 2007.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net.

Last Updated: September 12, 2005 23:32 EDT