South China's Hainan province will explore an innovative oil reserves model that combines government reserves with corporate reserves, according to a notice released last month regarding the implementation of measures of other free trade zones in the China (Hainan) Pilot Free Trade Zone.

The notice was jointly released by 18 departments, including the Ministry of Commerce, with 30 specific policies rolled out to boost efforts in improving the level of investment and trade facilitation, expanding the opening up of the financial sector, accelerating the development of the shipping sector, as well as exploring the establishment of a complementary mechanism of public credit information, financial credit information, and a new mode of intensive land use.

With its unique geographic location, Hainan aims to build itself into a zone to serve national strategies. Boasting rich natural gas and oil resources, as well as more than one-third of the country's total oil and gas reserves, the island province is a suitable place to explore the combination of government oil reserves and non-government reserves, according to reports.

Before 2000, China hadn't established a strategic oil reserves system and the country's oil reserves mainly relied on the commercial reserves of the three major state-owned oil companies, PetroChina, Sinopec, and CNOOC.

In 2001, the construction of strategic oil reserves projects was included in the national plan for the first time and two years later, the first phase of the national petroleum reserves base project was launched. 

On Nov 23, 2018, the State Council issued a notice to give the China (Zhejiang) Pilot Free Trade Zone the green light to explore innovative models integrating governmental and non-governmental oil reserves.