TNAG-0947-FCO40-1166-Oil-developments-in-and-around-Hong-Kong-1980 — Page 26

C.S. 166

CONFIDENTIAL

or information

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NOTE FOR EXECUTIVE COUNCIL

RESERVES OF OIL PRODUCTS,

TANKER STORAGE

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This memorandum is a progress report on this subject as requested by Members at their meeting on 14th October 1980.

2

On 20th May 1980, having considered memorandum XCC(80)64, Members advised and the Governor ordered that consideration of that memorandum, which proposed the setting up of strategic reserves of oil products, be deferred to permit investigation of a proposal to provide additional oil reserves at lesser cost by using tanker storage instead of land storage.

3

Action undertaken subsequent to that decision may be

summarised as follows:-

(a)

(b)

(c)

a preliminary, but thorough assessment of the costs and feasibility of a tanker storage scheme;

proposals put to Oil Policy Committee, on May 20th 1980;

proposals put to Council on 10th June 1980.

The decision then was that:-

(i)

Hong Kong should in principle use tanker

(ii)

(iii)

storage to add 30 days to its strategic reserves of fuel oil for a minimum of one year and a maximum of two years, the situation being reveiwed at the end of 1981;

the Government should appoint or set up a company to act as agent for the purpose of making all the arrangements for the tanker storage, including financing (if necessary on the basis of the Govern- ment guaranteeing the loan), procurement, maintenance, administration and sale;

the possibility of using a VLCC anchored outside Hong Kong waters (e.g. in Brunei Bay) should not be the first option but that the possibility of using LA2's two LRsis anchored in Hong Kong waters should be

considered as a first option; and

CONFIDENTIAL

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