China Orders CNPC, Sinopec Group to Supply Non-State Refiners
The Chinese government has ordered the two largest state-controlled oil companies to supply crude to privately owned refineries and buy their fuel products to help end shortages of diesel and gasoline.
China National Petroleum Corp. and China Petrochemical Corp. were told to provide crude to private processing plants, so- called “teapot refineries,” in northern and eastern provinces, the Beijing-based National Development and Reform Commission, said in a statement yesterday.
The world’s largest energy consumer after the U.S. is trying to ease its worst fuel shortages in more than two years that started in August during the summer peak demand period. Some non-state refiners reduced output to avoid losses caused by rising crude oil costs and state curbs on gasoline and diesel prices.
China National and Sinopec Group, as China Petrochemical is known, must buy fuel products meeting state specifications from the privately run refineries, China’s top economic planning body said in yesterday’s statement. The government restricts the number of non-state refiners allowed to import crude under current government rules and these companies typically process fuel oil into low-quality oil products.
The two state oil companies stopped rationing fuel at filling stations in Beijing, Shanghai, the southern province of Guangdong, and along major cross-province highways on Nov. 24, the commission said in its statement.
‘Market Order’
The authorities have “maintained market order” by cracking down on fuel hoarding and pricing irregularities. Once these measures take effect, the nation’s fuel supply will get back to normal “very soon,” it said.
The commission fined six filling stations in the provinces of Sichuan, Guizhou, Ningxia, Shaanxi, Hunan and Hebei that sold diesel at higher prices than allowed by the central government, according to a statement posted on the commission’s Web site today.
China unexpectedly raised gasoline, diesel and jet fuel benchmark prices by as much as 10 percent effective Nov. 1 in what it called an “urgent” step to end fuel shortages. China controls fuel prices to limit their impact on inflation.
Tags: CNPC, Energy, Petroleum, Sinopec