NDRC Sets Guidelines for China's Refined Oil Supply

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Researched by Industrial Info Resources (Sugar Land, Texas)--In early November, the National Development and Reform Commission (NDRC) gathered officials from China National Petroleum Corporation (CNPC) (Beijing) and China National Petroleum and Chemical Corporation (Sinopec) (Beijing) to analyze market demand and supply after the price of refined oil in China began to increase on November 1, 2007. Several measures to ensure market stability were proposed.

Recently, the international crude oil price has been increasing. Requested by the state, China's two largest oil suppliers, CNPC and Sinopec, actively sought oil resources, scientifically arranged production and managed to increase refined oil supply to the market. They have played a major role in providing a reliable and constant supply of refined oil to the Chinese domestic market. CNPC and Sinopec have indicated that they will adopt further measures to ensure refined oil supply to Chinese consumers.

The Plans:

1) The production schedule will be changed. Given the safety of production, the inspection and overhauling of oil-refining facilities will be postponed so that the volume of refined oil production, especially diesel, is maximized.

2) Explore resources from multiple channels to maximize diesel supply. Based on market demand, multiple diesel resources will be explored, and exports will be decreased to ensure domestic supply.

3) Refined oil resources will be reasonably distributed. CNPC and Sinopec's sales companies will be required to streamline the flow of refined oil to ensure the timely delivery of products to distributors at the provincial level. Those distributors will be required to keep their refined oil intake, sales and stock in balance while trying to tap into the potential of existing stock to make sure that as much refined oil is accessible to consumers as possible.

4) Follow the price set by the state to safeguard the market's stability. CNPC and Sinopec will conduct closer internal monitoring. Inspections and audits of production and sales companies will be conducted to make sure the state-set prices are followed. Stringent measures will be taken for all price violations.

5) China will work to enhance its ability to supply its own oil and natural gas.

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