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Oil terminal operator Vopak is expected to build a tank storage facility in southern China by 2011 which will be able to store up to 32 million barrels of oil, Reuters reports.

Netherlands-based Vopak, will reportedly join forces with China's State Development & Investment Communication Corp, a unit of State Development and Investment Group which specialises in building roads and bridges, to build the facility in Hainan Island, China's southernmost province.

Construction work on the $1 billion project is expected to commence in the second half of this year after obtaining approval from Beijing.

The new facility is expected to have a tank storage capacity of 5 million cubic metres (32 million barrels) for crude oil and refined fuel, a 300,000-tonne crude terminal and smaller berths for oil products.

Once completed, the new facility will almost double Vopak's total storage capacity in Asia to 10.4 million cubic metres. Currently, the company's accumulated capacity from its 22 terminals in Indonesia, Japan, South Korea, Malaysia, Pakistan, China, Singapore, Thailand and Vietnam is 5.4 million cubic metres.

Vopak's investment in China has so far focused primarily on smaller-sized tanks to store chemicals in Caojing, Ningbo, Tianjin, Zhangjiagang, Lanshan and Xiamen. However, the facilities in Lanshan and Xiamen are also able to store petroleum products.

Elsewhere in Asia, Vopak also stores oil products in 8 terminal facilities: 5 in Japan (Kawasaki, Kopbe, Moji, Nagoya and Yokohama), 1 in South Korea (Ulsan), 1 in Singapore (Banyan Terminal) and 1 in Thailand(Thai Tank Terminal).

China, the world's second largest consumer of oil after the United States, is currently in the process of improving its oil infrastructure by building tanks and pipelines to cope with its increasing dependence on petroleum imports.

If approved, the Hainan project will make Vopak one of the few foreign companies to be involved in China's oil storage business, which has long been dominated by the country's state-owned oil companies.

Vopak is the world's largest independent tank terminal operator offering storage and transshipment solutions at 80 terminals in 32 countries. Last year, the company said it increased its global storage capacity by 23 percent to around 27 million cubic meters and achieved an operating profit of EUR 318 million.