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China struggling to meet fuel shortages
"Generally speaking, the petrol supply in Guangdong is tight," said a publicity department official in the Guangdong branch of China Petroleum and Chemicals Corp., also known as Sinopec. The outlook for just about every fuel category was "not optimistic," said the official, who gave only her surname, Huang. Reports said the shortages had spread to Shanghai and eastern China's Zhejiang province. Shanghai's city government and filling station employees denied the city was facing shortages. The government has appealed to major fuel suppliers Sinopec and China National Petroleum Corp. to boost shipments into Guangdong. "Sinopec is trying to transport oil from other parts of China to fulfill Guangdong's needs," said Huang. But she added, "It does not totally depend on us." In another development, Sinopec is expected hold an emergency meeting in Guangzhou to discuss measures to adress the shortages, the Xinmin Evening Post said. Sources from Sinopec attributed the shortages in Guangdong to traffic disruptions caused by Typhoon Matsa and heavy rainfalls in Northeast China, according to the report. The oil storage in Northeast China is sufficient to resolve the shortages in Guangdong and once the railway and road traffic resumed, the shortages in the Pear River delta will be greatly eased, the sources said. The shortages have prompted calls for changes in controls that fix gas and diesel prices at levels lagging well behind changes in international crude oil prices. Pump prices in China rose an average of 20 percent year-on-year in the first five months of the year, while international crude oil prices surged 30 percent during the same time. Crude oil prices were hovering above $66 a barrel Tuesday, about 46 percent above the level a year ago. With those higher costs eating into profits, domestic refiners reported net losses totalling 4.19 billion yuan ($517 million) in the first six months of this year, down from a net profit of 16.4 billion yuan ($2 billion) a year earlier. Instead of meeting rising demand at home, refineries have instead boosted exports to markets overseas, where they can charge higher prices.
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