THE Chinese government has ordered PetroChina Co and China Petroleum & Chemical Corp to increase fuel production, imports and distribution to end shortages in provinces, including Fujian and Heilongjiang.
The nation's two largest oil refiners have been told to prevent a repeat of shortfalls seen in August, Bi Jingquan, vice chairman of the National Development and Reform Commission, the nation's top economic planner, said in Beijing yesterday.
Increased refinery runs to meet government requests for additional supply may deepen losses from processing oil at PetroChina and Sinopec, as China Petroleum & Chemical is known. The state controls prices of diesel and gasoline to curb their impact on inflation, which climbed to a 10-year high in July, Bloomberg News said. Benchmark New York oil prices rose to a record in August.
The state wants to "narrow the gap between domestic fuel prices and global levels," Bi said. Any decision by the government to raise prices would depend on international oil costs and the affordability of fuel for Chinese society, he said.
Sinopec's refineries are operating at a loss in the second half and aren't able to make a profit processing crude unless oil falls below US$64 a barrel, officials from Asia's largest refiner said on August 31.