China has ordered its two largest oil companies to run their
refineries at full capacity in a further move to address a fuel
shortage.
The National Development and Reform Commission and the Ministry
of Finance have asked Sinopec Group and China National Petroleum
Corp to fulfill their social responsibility to ensure market supply
of refined oil products, the commission said in a statement posted
on its Website yesterday.
The two "must run their facilities at full swing," said the
commission, China's top planning body. It also told the two state
firms to fully utilize the refining capacity of private oil firms
to boost supply.
Sinopec and CNPC have been cooperating with local private
refiners in Liaoning, Shandong and Sichuan provinces by providing
crude oil to them and then buying back refined products under
government coordination, the commission said earlier this week.
The two companies have also been told to adjust production by
making more diesel and less oil products for chemicals.
A shortage of diesel, commonly used for heavy duty engines such
as those used by buses and trucks, have hit some areas in China
with rising crude prices on the international market and higher
winter demand. In China, prices for petrol and diesel are set by
the government, and so do not reflect the true costs when crude
prices soar.
The government raised petrol and diesel prices by up to 10
percent this month but that still cannot cover refineries' losses
against the backdrop of high-flying crude prices.
In yesterday's statement, the commission reiterated that state
oil companies should strictly implement the fuel prices set by the
government and not hoard products at pump stations.
(Shanghai Daily November 30, 2007)
