China began filling its third government-owned strategic crude oil reserve last month, two industry sources say, as Beijing takes advantage of diving crude oil prices to build up an emergency supply buffer for the future.

About 7.3 million barrels of crude, more than half of them from Saudi Arabia, were pumped into the storage tanks at the Huangdao base, in Qingdao city on the east coast, adding to reserves built up last year at China's first two reserve bases, sources who monitor shipments in China said.

'More oil will be pumped into the storage tanks in December and January,' said one industry source, who is familiar with tanker movements and port operations along China's coast.

'At least two VLCC (very large crude carrier) tankers loaded with Saudi Arabian oil were discharged in early November for the strategic tanks,' said another source who declined to be named due to the sensitivity of the issue.

Two VLCCs would carry about 4 million barrels of crude. The information could not be confirmed because news about the government's newly built stockpiles is a closely guarded state secret.

Calls to the National Development and Reform Commission's news department on Tuesday went unanswered. An official with the National Energy Administration's Policy and Law Department, which is in charge of news releases, declined to comment on SPR issues.

But the information supports what some analysts have suspected for months: that strong growth in China's crude oil imports over recent months has been driven in part by stockbuilding rather than demand from refiners, many of which have begun curtailing production as the Chinese economy slows and oil demand ebbs.

China's crude oil imports in October jumped 28 per cent from a year ago, data showed last month. In the first ten months imports were up 10.6 per cent from 2007, despite anaemic growth rates over the summer. Data on November imports is due on Wednesday.

The Huangdao volume, equivalent to around 240,000 barrels per day, would represent almost 40 per cent of its storage capacity, the third of four strategic petroleum reserve sites that will be able to hold 100 million barrels of oil. The last tank-farm is due to be commissioned by year-end at Dalian.

China has already completed planning of a second phase of investment in strategic tanks to store 26.8 million cubic metres (169 million barrels), the National Development and Reform Commission, China's top economic planning body, said last month.

However, it did not provide details about where the bases would be located, how much investment would be involved, or when construction would be completed.

The first two facilities, at Zhenhai and Zhoushan, were up and running more than a year ago, but with oil prices rising Beijing last year leased out its 33-million-barrel capacity at Zhenhai to top refiner Sinopec Corp for use as commercial storage. It is not clear whether that arrangement continues or whether the tanks are full or not.

Sinopec also has a 200,000 bpd refinery near the Huangdao facility in Qingdao, which was commissioned in June. But it is not clear whether it would also lease Huangdao for its operations, as Zhenhai.-Reuters