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Fuel rationing spreads to gas stations across China

(Agencies)
Updated: 2007-10-31 15:19

Gas stations in parts of China are rationing and even halting diesel sales amid a fuel shortage triggered by a widening gap between soaring crude oil prices and government-controlled retail prices, the financial chief of China's biggest refiner said yesterday.

"Oil prices are rising but (domestic) oil product prices are kept low by the government. The impact on our refining operations is quite big," Dai Houliang, chief financial officer at China Petroleum & Chemical Corp, or Sinopec, said in a teleconference in Hong Kong to discuss the company's third-quarter results.

Dai said overall supplies in China were still stable, but that some areas might experience shortages.

He blamed rising demand as well as bad weather, which was preventing supplies getting to some areas.

"We will try the best to ensure a stable supply of fuel in the market, but it's a big challenge for us," he said.

Filling station operators in Shanghai confirmed they were reducing or halting sales due to the shortages.

"We have no diesel at all. I have no idea when the situation will return to normal. We're not getting any supplies from our company," said a staffer at the Sinopec Qibao gas station in western Shanghai.

The problem was especially acute in districts traversed by cargo trucks crossing the city to get to container ports along the coast.

With crude oil prices approaching US$100 a barrel, some refineries in China have chosen to shut down for "maintenance" rather than continue operations, Shanghai Daily reported.

Light, sweet crude for December delivery fell back a bit yesterday after hitting a record trading high of US$93.80 on Monday.

Local newspapers reported that filling stations have been rationing gas on an informal basis, allowing each customer only a quarter tank of diesel or less.

The worst shortages have been in south China's Guangdong and Fujian provinces, as well as eastern Zhejiang Province and central Henan Province, they said.

In 2005, fuel shortages that authorities blamed partly on tanker transport disruptions due to typhoons resulted in long lines at filling stations in southern China. The government ordered refiners to stop exporting fuel oil and meet domestic demand first.

Filling stations in Shanghai have also seen shortages of liquid petroleum gas (LPG), causing problems for those using LPG-fueled scooters and cars.

Dai's comment came after the company late on Monday posted a forecast-beating 5.5 percent rise in third-quarter net profit under international accounting standards, even though its refineries swung back to an operating loss.

Net profit totaled 13.63 billion yuan (US$1.8 billion) over the three months ended yesterday, under international accounting standards, up from 12.92 billion yuan in the same period last year.


(For more biz stories, please visit Industry Updates)



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