China has ordered its two largest oil companies to run their refineries at full capacity in a further move to address a fuel shortage.

The National Development and Reform Commission and the Ministry of Finance have asked Sinopec Group and China National Petroleum Corp to fulfill their social responsibility to ensure market supply of refined oil products, the commission said in a statement posted on its Website yesterday.

The two "must run their facilities at full swing," said the commission, China's top planning body. It also told the two state firms to fully utilize the refining capacity of private oil firms to boost supply.

Sinopec and CNPC have been cooperating with local private refiners in Liaoning, Shandong and Sichuan provinces by providing crude oil to them and then buying back refined products under government coordination, the commission said earlier this week.

The two companies have also been told to adjust production by making more diesel and less oil products for chemicals.

A shortage of diesel, commonly used for heavy duty engines such as those used by buses and trucks, have hit some areas in China with rising crude prices on the international market and higher winter demand. In China, prices for petrol and diesel are set by the government, and so do not reflect the true costs when crude prices soar.

The government raised petrol and diesel prices by up to 10 percent this month but that still cannot cover refineries' losses against the backdrop of high-flying crude prices.

In yesterday's statement, the commission reiterated that state oil companies should strictly implement the fuel prices set by the government and not hoard products at pump stations.

(Shanghai Daily November 30, 2007)