On November 27, the National Development and Reform Commission (NDRC) urged China National Petroleum Co. (CNPC) and China Petroleum & Chemical Co. (Sinopec), two domestic oil giants, to increase refined oil supply to ease product shortages.

According to the NDRC's requirements, CNPC and Sinopec should set no limits on oil supply to certain cities, including Beijing, Tianjin, and Shanghai, as well as to gas stations along superhighways like the Jingzhu Superhighway (Beijing to Zhuhai, Guangdong Province), Jinghu Superhighway (Beijing to Shanghai), and Jingfu Superhighway (Beijing to Fuzhou, Fujian Province). The two companies should also expand supplies to Yunnan Province, Guangxi Zhuang Autonomous Region, and Zhejiang Province where resources are scarce.

So far, CNPC has provided an increased diesel supply of 20,000 tons to Yunnan and 7,000 tons to Guangxi. Meanwhile, Sinopec has secured a 27 percent year-on-year growth in its supply to Yunnan's diesel market. Yunnan and Guangxi are two sugar production bases.

Based on the requirements, the two oil producers should also guarantee enough oil supply for the transportation of basic necessities. NDRC asked the two firms to cut chemical oil supply and boost diesel production. The commission compelled the two companies to cooperate with refineries in the northeastern Chinese provinces and Shandong Province. It encouraged the oil giants to sell crude oil to local manufacturers and purchase refined products from them.

Spokesmen from CNPC and Sinopec said they would take every pain to guarantee oil supply in large cities like Beijing, the Beijing Times reported on November 28.

According to an industrial report issued by the NDRC on November 27, the production of crude oil rose 1.9 percent year on year last October. Dong Xiucheng, the deputy dean from the Business and Management School of China University of Petroleum, believes the surging increase of the Gross Domestic Product (GDP) and oil speculation caused the depleted resources despite production increase.

According to the NDRC, the country will punish oil speculators who block the oil supply to net profits from illegal price hikes on the black market. In some cities, cars and trucks queued in long lines before gas stations, struggling to obtain petroleum and diesel.

(China.org.cn by Wu Jin November 29, 2007)