The U.S. is seeing progress in talks with China over the country's management of its strategic petroleum stocks and officials are upbeat on energy policy talks planned for October, a senior energy department official said Wednesday.
The U.S. and the member countries of the International Energy Agency want the burgeoning country to join its emergency reserve plan that allows the bloc to respond to supply crises.
As part of membership, the U.S. and IEA wants the country to agree to prohibit the use of the country's national stocks to moderate prices, as opposed to help deal with major supply disruptions.
Katherine Fredricken, the Department of Energy's acting assistant secretary for energy of policy and international affairs, said the U.S. was planning to convene a special workshop on reserves management at the next energy policy dialogue in October.
"We're seeing progress," Fredricksen told Dow Jones Newswires on the sidelines of U.S.-China Economic and Security Review Commission hearing. "From just two years ago, we're seeing significant progress on commitments...they're coming around to an appreciation of what a (strategic petroleum reserve) is for," she said.
Fredriksen said China's phased reduction of fuel price subsidies is an indication that the country was transitioning to a more responsible energy management policy.
She said the U.S. was pressing the Chinese to start implementing targeted subsidies, such as the U.S.'s energy subsidies for low-income families. "Clearly there's a class diversification growing in China and they don't need to be subsidizing those folks that don't need it," she said.
"We agreed we had to have a plan to phase these out, (as) we know they can't just be eliminated tomorrow, it would cause wide-spread panic, as well as the markets would go crazy," Fredriksen said.
The DOE official said the U.S. was looking at de-linking IEA membership requirements with Organization for Economic Cooperation and Development, or OECD, membership requirements.
With 80% of recent demand growth from countries subsidizing, Fredriksen applauded policy shifts by China and India on subsidies, but admonished Middle Eastern and South American countries such as Venezuela for not moving fast enough to end subsidies.
She also said the U.S. would press the China for more robust supply and demand data.
China already has committed to building up a 30-day stockpile, and has confirmed preliminary plans to increase that to 60-day and 90-day reserves over time.