China National Petroleum Corporation (CNPC) is considering
importing another 300,000 tons of diesel oil following the Sinopec
Group to guarantee domestic supply during the upcoming Spring
Festival.
The imported diesel is scheduled to arrive next month, sources
with Shanghai Securities News said. This meant a total of
800,000 tons of diesel would be provided to the domestic market
next month, as Sinopec Group announced previously it would import
500,000 tons during the same period.
It would help provide for a large demand increase the market
usually experienced in the first quarter, said Li Yu, Oilboss.cn
Inc senior editor.
"Oil demand will surge in the transport sector because many
Chinese travel home during the traditional Spring Festival, which falls on Feb. 7, 2008.
Construction projects and infrastructure buildings will begin
shortly after the festival, and farmers will also need diesel to
fuel their tractors when the planting season comes."
The government-controlled oil prices in the domestic market --
which was unable to cover the international crude cost -- had been
blamed for a shortfall of oil supply in China. Some refineries
would stop processing to avoid losses while some producers and
dealers would hoard oil to gain more profit in case of possible
price increase.
China has raised domestic oil prices since November and asked
state-owned oil giants to import oil and make orders with local
refineries.
The situation highlighted the importance of a state strategic
oil reserve base program started in 2004. The first national oil
reserve base under the program had been filled with crude oil
earlier this month. It was designed to offset oil supply risk and
reduce the impact of fluctuating energy prices worldwide on China's
domestic market for refined oil.
The bases were designed to maintain strategic oil reserves
equivalent to 30 days of imports, or about 10 million tons.
(Xinhua News Agency December 28, 2007)
