Oct. 19 (Bloomberg) -- China National Petroleum Corp., the nation's largest oil company, increased fuel sales by 17 percent in the third quarter to meet rising domestic demand.

The company processed about 10 percent more crude and operated its plants at 99 percent of capacity during the period, the Beijing-based company said on its Web site today.

Chinese oil companies are increasing fuel output in the third quarter, when the nation's fuel demand normally peaks because of increased travel during school holidays. China National Petroleum and China Petrochemical Corp. were ordered by the government last month to boost fuel output to end shortages in Heilongjiang in the north and Fujian in the south.

``We have maximized capacities at our refining units this year to ensure fuel supply in the domestic market,'' China National Petroleum said in the statement.

The state oil refiner has imported more than 300,000 metric tons of oil products this year, including 200,000 tons of gasoline and diesel delivered to the coastal region in the third quarter, it added. The eastern sales unit has imported more than 100,000 tons of fuel at a loss of as much as 1,500 yuan ($200) a ton, it said.

China controls fuel prices to limit their impact on inflation. Chinese refining companies lose money when they process crude into fuel amid soaring crude costs and capped retail prices. Chinese oil companies also sell imported oil products at a loss as fuels are priced lower domestically compared with international prices.

Fuel Purchases

China National Petroleum bought 60,000 tons of gasoline for September delivery, traders involved in the transaction said Sept. 11.

Rival Sinopec Group, as China Petrochemical is known, bought two cargoes or 60,000 tons of gasoline at a loss in September. Sinopec Group will pay 6,800 yuan a ton for the imported cargo while domestic selling price is about 6,300 yuan a ton, it said Sept. 11.

Unit PetroChina Co. processed 611.4 million barrels of oil into fuels, or 5.2 percent more, in the first nine months, it said Oct. 15. Gasoline production fell 0.9 percent to 16.1 million tons and diesel output rose 7.9 percent to 35.5 million tons during the period.

The nation's oil demand will increase 5.7 percent to 7.6 million barrels a day this year, outpacing global growth of 1.5 percent, the International Energy Agency said in its September forecast.

To contact the reporter on the story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net.

Last Updated: October 18, 2007 22:59 EDT