China will increase its fuel output and crack down on hoarding
to bring the nation's tight oil supply back to normal, the National
Development and Reform Commission said yesterday.
"Since October, some areas have seen diesel in short supply due
to surging global crude oil prices and rising consumption before
the forthcoming winter. Some refineries are also not running at
full capacity which puts more pressure on the oil supply," the NDRC
said in a statement on its Website.
To cope with the situation, the nation's top planner said it
will get China Petroleum and Chemical Corp and China National
Petroleum Corp to obtain diesel supplies from more sources and
distribute them rationally.
All refineries will lift their efficiency and production will
run at peak capacity by delaying maintenance work and reducing the
refining of industrial oil so that home, transport and public
utility supplies will be guaranteed.
The two dominant state oil companies will be urged to cooperate
with the regional refineries in Shandong, Shaanxi and Sichuan
provinces, and provide more crude oil to them and at the same time
purchasing more of their refined products.
Key areas including Shanghai, Beijing, Tianjin and Guangdong
Province, as well as locations along major highways, will have to
ensure that enough fuel is available.
As well the CNPC will deliver 20,000 tons of diesel to Yunnan
Province and another 7,000 tons to Guangxi Zhuang Autonomous Region
where serious shortages of fuel have been reported.
China will reinforce its market supervision and take action on
hoarding and overcharging.
"With these measures, China's fuel supply will be normal again
very shortly," the statement said.
Crude prices, expected to hit US$100 per barrel soon, have
exacerbated losses for Chinese refineries as the refined oil
product prices are set by the government.
China raised retail fuel prices by up to 10 percent on November
1. The national base price of diesel was increased from 5,020 yuan
(US$669) to 5,520 yuan per ton.
But this is a long way from bridging the domestic price gap with
that of the global market.
Chinese refineries can only break even when crude oil is below
US$65 a barrel, officials said. But by yesterday light sweet crude
oil for January delivery had already risen to US$97.7 a barrel in
electronic trading on the New York Mercantile Exchange.
Last Monday, Shanghai raised the price of bottled liquefied
petroleum gas for private use to ease pressure from the global
surge in oil prices.
(Shanghai Daily November 28, 2007)
