Chinese majors struggle to ensure adequate fuel supply at the pump

CNPC and the Sinopec Group said they plan to boost their purchase of oil products from other refineries, including domestic and foreign refineries, to 60 million metric tons this year to meet strong local demand. In 2010, CNPC bought 40 million tons of oil products abroad, while Sinopec purchased 20 million tons. Both companies are said to be dealing with a local marketplace where it is getting more difficult to source oil products, while maintaining their mandate to ensure adequate supply at the pump. This must also be done despite potential losses. Due to the shortage of oil products, wholesale prices have outstripped retail prices in some areas, the official Xinhua New Agency reported. In East China’s Shandong province, for example, the producer price for diesel fuel has exceeded the ceiling retail price. In the Yangtze River Delta, the wholesale price of RMB 8,500 (US$1,312) per metric ton is approaching the ceiling retail price. (May 23,2011)