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Guangzhou oil supply 'returning to normal'
By Zhan Lisheng in Guangzhou and Wang Ying in Beijing (China Daily)
Updated: 2005-08-19 05:49

Cars line up to buy petrol at a petrol station in Dongguan, south China's Guangdong province, August 17, 2005.[newsphoto]

The vice-mayor said the oil supply would be adequate for the city's consumption needs in the next few days and residents no longer needed to store petrol for future use.

But Guangdong's situation has caused a general outcry of how China's oil supply is managed even as refinery officials offered reasons for the latest shortage.

Sinopec blamed soaring crude prices, which have reduced the refiners' production, and the latest typhoons along the eastern coast, which have paralysed oil shipments from north to south.

"We rely on shipping for most of the refined oil transportation from the northern refineries and stockpiles to the south," Sinopec spokesman Chen Ge said.

Chen said that as the weather improves, so will the oil supply. But he did not set a timetable.

Analysts' comment

Some industry analysts say the supply problem stems from the central government-controlled oil pricing system, which lags far behind changes in the world market.

"In the long run, the country needs to float domestic oil prices more closely to the world level to channel oil consumption into an energy-saving model, which in return will contain demand and balance the market," said Ni Weidou, chairman of Tsinghua-BP Clean Energy Research and Education Centre.

He Jun, chief analyst of Beijing Anbound Consulting Co, said the oil shortfall demonstrates the problems of having Sinopec and PetroChina controlling the oil market.

"The government should smash the duopoly by introducing more market players in the oil sector including privately owned oil companies and foreign firms," he said.

A more flexible pricing mechanism for oil products is also urgently needed, he said.

The opening-up to foreign competitors of China's refined oil wholesaling market by the end of next year in accordance with entry into the World Trade Organization will help smooth the market chains, He added.

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