China Petroleum & Chemical Corp., the nation’s largest oil refiner, will increase daily oil processing to a record this month in a bid to avert diesel shortages as farmers and factories burn more of the fuel.
Oil processing will increase 10 percent from a year earlier to 583,000 tons a day, exceeding the October record by 5,900 tons a day, parent China Petrochemical Corp. said in its online Sinopecnews newsletter today.
China, the world’s biggest energy consuming-nation, is accelerating power restrictions to meet efficiency targets, according to Goldman Sachs Group Inc. 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, said Qiu Xiaofeng, an oil analyst at China Merchants Securities Ltd.
“The diesel shortage is being deepened by exceptional demand caused by increased use of diesel-fired power units, in addition to seasonal demand from farmers,” Qiu said by phone in Shanghai.
Sinopec, as China Petroleum is known, will reward plants that beat their diesel production targets and is limiting the output of kerosene, according to the statement. The company arranged immediate imports of 200,000 tons of diesel to ease tight supplies in regions including Zhejiang, Gansu and Jiangxi.
The state-controlled oil refiner is “sparing no effort” to ensure supplies to the market, the parent company said. Sinopec won’t do maintenance at oil refineries in major centers and has postponed work at plants including Gaoqiao in Shanghai and in Guangzhou, it said.
The government has been shutting factories to help 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.
“Factories are turning to small diesel generators after some local governments rationed electricity to meet energy conservation targets,” Qiu of China Merchants said. “This exceptional demand will diminish from the start of next year, after the government completes the five-year period ending this year.”
Sinopec refineries have operated at full capacity for four months, according to the parent’s statement. Diesel output rose by 8.3 percent in October and the yield of the product, used to fuel power generation and trucks, increased to 2.16 times of that of gasoline last month, higher than the average diesel yield ratio so far this year, it said.
The Beijing-based refiner is also reducing production of feedstock used to make ethylene in favor of diesel output, it said.
Sinopec will keep oil-product stockpiles at current low levels this month, it said.