Construction began in Zhejiang province on Saturday on China's largest commercial underground oil reserve project, further balancing domestic oil supply and demand, said its operator China National Offshore Oil Corporation, or CNOOC.

Independently designed and developed by CNOOC, the project consists of 3 million cubic meters of underground crude oil caverns and ground facilities for crude oil storage, transportation, and other supporting functions.

The project is expected to be put into operation by the end of 2026, the company said.

By providing a stable supply of crude oil, the project is of great significance in responding to major energy supply emergencies and promoting China's commercial oil reserves, CNOOC said.

Currently, China's commercial oil reserves mainly include ground storage tanks and groundwater-sealed caverns. Compared with ground storage tanks, the latter is built at a certain depth underground with a reduction in the construction cost of about 20 percent and in operating costs of about 50 percent, the company said.