Citing sources within China’s National Development and Reform Commission (NDRC) the paper said, “A strategic reserve is necessary given China’s inadequate storage facilities, growing demand, international price fluctuations and geopolitical instability [but] fund-raising has always been the greatest hurdle towards building a strategic reserve infrastructure, an issue which the establishment of the new company will address.”

“The state-owned shares of the country’s four major oil groups, China National Petroleum Corp, China Petroleum & Chemical Corp (Sinopec), China National Offshore Oil Corp (CNOOC) and Sinochem Corp, may be injected into the oil reserve company as investment capital,” added the report.

Another option considered is to raise the funds by levying market entry fees on oil firms which trade in the domestic oil products market.