Vopak and its state-run Chinese partner will build a tank farm in southern China to store 32 million barrels of oil by as early as 2011.
The project, reportedly worth $1 billion (756 million), will make Vopak one of a few foreign firms involved in the huge oil storage business long dominated by the country's state oil companies.
China is the worlds second largest oil consumer and is accelerating the building of oil infrastructure from tanks to pipelines, both by the government and companies, to set up a supply buffer as its dependence on imports is set to surge from around 50%.
Construction of the Vopak facility, to be built in China's southernmost Hainan island, will start in the second half of this year after it has obtained Beijing's approval, Shi Zhen, head of the Investment Promotion Bureau of Yangpu Economic Development Zone, says.
The facility includes 5 million m3 of storage tank capacity for both crude oil and refined fuel, a 300,000-tonne crude terminal and smaller berths for oil products.
Vopak selected Hainan due to its strategic location, close to a new refining and petrochemical base as well as consumers, Xu Jin, VP of China business development for Vopak, comments.
The 32 million barrels of capacity, equivalent to 5 days of Chinese crude imports, is equivalent to the total capacity the Dutch firm has built in Asia, including Singapore, Malaysia, Thailand, Japan and South Korea.
Vopak's China investment has so far focused on smaller tanks to store mostly chemicals.
Its vast investment in Hainan is a tie-up with China's State Development & Investment Communication Corp, a unit of State Development and Investment Group which specialises in building roads and bridges.