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Diesel shortage might end in December

By Gao Yuan (chinadaily.com.cn)
Updated: 2010-11-25 14:05

China's diesel storage is likely to end in late December, National Business Daily reported Thursday. The newspaper cited sources from China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec), the two biggest petroleum enterprises in the country.

China's refined oil products reserves have witnessed a dramatic decline since August. The stock of diesel dropped 8.6 percent in September month-on-month and 10.7 percent in October. In addition, the stock of refined oil products has plunged to 14 million tons as of the end of October, while the normal level is about 17 million tons, said Liao Kaishun, an analyst at C1 Energy. Diesel storage has dropped to about 6.25 million tons versus a normal level of 9 million tons, Liao added.

CNPC is pushing its daily diesel output to a record high of 400,000 tons to address the nationwide oil shortage, the report said.

Thanks to measures such as increased production and imports, CNPC and Sinopec reported an upswing in their oil storage. As of Nov 16, the operating rate of the county's 48 major refineries hit 87.1 percent, higher than last year's record of 86.4 percent. In addition, about 500,000 tons of diesel fuel will be imported by CNPC and Sinopec, the report said.

The two companies will soon add 1 million tons of diesel supply to the market to help meet demand, said Xia Shixiang, deputy general manager of Sinopec's sales company.

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According to Xia, the diesel shortage is easing and the purchase ceiling at some gas stations has increased to 500 yuan to 600 yuan ($75.2-$90.2) from 200 yuan to 300 yuan in previous months.

The diesel shortage will come to an end in December if the world oil price does not rise, Xia added.

However, Han Xiaoping, chief executive officer of China Energy Net, said he believes that China's oil shortage is far from over.

According to C1 Energy's survey, oil supplies in major coastal cities are in better shape, but the shortage continues in most Central and Southwest cities.

Han said that the pressures from energy-saving and emission-reduction policies will remain strong at the end of this year, and some manufacturers will have to use diesel-powered electricity to power their machines in order to meet year-end delivery deadlines. The country also has 100 million tons of coal waiting to be transported, he said.