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Shanghai will build its first storage facility to house refined fuel products for emergency use in case of any future energy supply shortfall.

The emergency stockpile will be capable of storing 30,000 tons of refined oil products, mainly diesel, at the Shanghai Chemical Industry Park, about 50 kilometers southwest of the city.

The project will be part of a new 200,000-cubic-meter depot to be built and filled by Shanghai Fuel Co, a unit of leading retailer Bailian Group, the chemical park said.

On April 28, park authorities and Bailian signed agreements regarding investment intention and land use rights, in what the park said marked the start of the city's efforts to set up emergency fuel stockpiles. Construction of the project, which will cost about 270 million yuan (US$35 million), is expected to be completed in mid-2009.

Fuel supply has been up and down in Shanghai in recent years due to rising global crude oil prices and some temporary shutdowns of domestic refineries for maintenance checks, the park said.

"Seasonal fuel supply disruption will be effectively eased upon the completion of the building of the emergency refined fuel reserve," the chemical park said.

Shanghai Fuel demolished its 50,000-cubic-meter Hunan fuel storage facility in the downtown area to make way for urban redevelopment in November, 2005. Another 40,000-cubic-meter commercial storage facility at North Bund will soon be scrapped for the same reason.

Shanghai is building another mega fuel storage facility in Yangshan Deep-Water Port, southeast of the city, with total capacity of up to 2.7 million cubic meters.