The Chuandongbei Project covers over 800 square kilometers in Sichuan Province and the Chongqing Municipality. Unocal East China Sea, Ltd. holds a 49 percent participating interest as the operator andChina National Petroleum Corporation holds a 51 participating percent interest.

With China's economy growing at its slowest pace in a generation and Asia's trading powerhouses Japan and South Korea struggling to create growth, Asian fuel oil demand for container ships should stagnate in 2016, putting more pressure on a market that struggled last year.

Natural gas demand is expected to rise to 199 billion cubic meters in 2016, Zhu Fang, head of market information department at the China Petroleum and Chemical Industry Association told Reuters after a media briefing by the association on Tuesday in Beijing.

"We are certain the Chinese economy will grow only slowly and that the yuan will depreciate in 2016," said a senior trader with a Shanghai-based fund. "The biggest uncertainty we have is how much the yuan will depreciate, which could revalue metals in China and affect our bets."

Underground sites are slated to hold about 130 million barrels, which would account for nearly a quarter of the 550 million-barrel SPR target set by Beijing for 2020, according to local media and analysts.