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High prices leave refiners in a pinch
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11:11, November 01, 2007

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Supplies of refined oil, especially diesel, are tight in some parts of the country because refiners cannot afford to pay the high global wholesale prices, but the situation should improve by the end of the year, an official with the Guangdong Oil and Gas Association said.

Yao Daming, director of the association's oil products department, said yesterday the pressure created by the oil shortage "should ease by the end of this year".

"There will be less demand for fuel for cars and electricity in the fourth quarter since the weather is becoming cold," Yao said, adding that global oil prices are also expected to see a slight drop at the end of this year.

People living in southern coastal areas tend to use their air conditioners less in the winter because of the relatively mild temperatures.

However, Yao said the situation this year is not as serious as it was two years ago, when most of the country was hit by oil shortages.

"The current shortages, which are also partly the result of an unbalanced pricing system in the domestic market, will not affect the whole nation," Yao said.

Guangdong has a reserve supply of about 600,000 tons of diesel, or enough to meet 10 days worth of demand, Yao said.

"Gas stations and refiners have been frustrated by the rising wholesale prices of major oil products, especially diesel. That explains why supplies are tight in some cities," Yao said.

Fuel shortage

Since last week, drivers in some parts of the county, especially in the Pearl River Delta, have had trouble buying fuel for their cars. And some gas stations have had to temporarily shut their doors because of the high wholesale oil prices.

However, Guangdong's economic and trade commission said the supply of refined oil is still far from the warning point. And some 90,000 tons of diesel imported by Sinopec has been shipped to Guangdong.

The nation's two major oil companies, Sinopec and PetroChina, have promised to allocate about 4.2 million tons of refined oil to Guangdong in the fourth quarter.

Meanwhile, Xinhua reported yesterday that Sinopec and PetroChina would focus on "importing rather than exporting" diesel until the end of the year, in an effort to ease the tight supply.

PetroChina shipped some 200,000 tons of diesel to coastal areas in the third quarter. Sinopec has imported 150,000 tons in the past two months.

Source: China Daily

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