PetroChina, Sinopec Boost Diesel Supply Amid Shortages

PetroChina Co. and China Petroleum & Chemical Corp., the country’s biggest refiners, are bolstering diesel output as the country battles shortages that have left gas stations dry in the south and east.

PetroChina’s western plants produced 20 percent more winter-grade diesel last month than originally planned, parent company China National Petroleum Corp. said in a statement on its website today. China Petroleum & Chemical, or Sinopec, has delayed plant maintenance and increased imports to meet the fuel demand, it said last week. Both companies said they will process record amounts of crude this month.

Chinese factories are buying up diesel, depleting supplies for trucks, as government-mandated electricity restrictions force them to use the transport fuel to power their generators. The shortages may push up Asian diesel prices, boosting profits for the region’s refiners, according to Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore.

“The diesel demand increase from China will certainly tighten up the regional gasoil market,” Shum said in a telephone interview today. “This is definitely good news for regional export refiners in Singapore, Korea and Taiwan.”

China is curbing industrial electricity use in a last-ditch effort to meet Premier Wen Jiabao’s goal of cutting energy consumption per unit of gross domestic product by 20 percent in the five years ending 2010. That’s prompting some manufacturers to turn to their own diesel generators at the same time as use of fuel climbs during the autumn harvest, Qiu Xiaofeng, an oil analyst at China Merchants Securities Ltd., said Nov. 5.

Crack Widens

The gasoil, or diesel, premium to Dubai crude oil widened for a fifth day in Singapore to the highest since Oct. 26, according to data from PVM Oil Associates Ltd., a brokerage. The crack spread, a measure of the profit from producing diesel in Singapore, was at $12.92 a barrel at 2:21 p.m. local time. It has averaged $11.12 this year.

More than 2,000 private gas stations in southern China closed after running out of the transport fuel, Xinhua news agency reported yesterday, citing data from the China Chamber of Commerce for the Petroleum Industry.

Truck drivers are waiting for as much as three hours to get their vehicles filled at a gas station owned by Sinopec, in Ningbo city in Zhejiang province, Shanghai Securities News said today. Most gas stations in Ningbo and Hangzhou, also in Zhejiang, and Nanjing, the capital city of Jiansu province, are limiting diesel sales to 400 yuan ($60) a truck, according to the report.

Work Delayed

Sinopec will raise daily crude consumption by 10 percent this month compared with a year earlier to a record of 583,000 tons, its parent company China Petrochemical Corp. said on Nov. 4.

Work is postponed at facilities including Gaoqiao in Shanghai and plants in Guangzhou and maintenance won’t be carried out at refineries in major centers, the Beijing-based company said. It has arranged for imports of 200,000 tons of diesel to ease tight supplies in Zhejiang, Gansu and Jiangxi.

PetroChina will also process crude at record levels to help meet demand, it said on Nov. 5. The Beijing-based company will raise crude volumes by 8.5 percent this month from a year earlier and boost output of fuel including diesel and gasoline by 11 percent, according to the company.

CNPC plans to expand its daily diesel supply in November by 7 percent from the previous month. The company’s refineries in the west of the country had produced 56 percent more low freezing-point diesel by the end of October compared with a year ago. Stockpiles almost doubled last month, according to today’s statement.

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

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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