Sinopec to Stop Exports of Refined Products Amid Growing Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)-- China Petroleum and Chemical Corporation (Sinopec) (NYSE:SNP) (Beijing) announced on May 26, 2008, that it will stop exports of refined products this summer, because of rising domestic demand, especially during the Olympics. The company said it will increase imports and delay unit overhauls to safeguard a constant supply to the quake-hit Sichuan Province, while also meeting demand during the summer harvest and the Olympics in August.

Some reports stated that Sinopec has stopped exports to Southeast Asian countries, with product oil exports down 5.6% in the first quarter. Exports to Hong Kong and Macao will not be affected.

China National Petroleum Corporation (CNPC) (Beijing) has announced that it will increase oil supply to Sichuan Province, Chongqing City, Shaanxi Province and the Inner Mongolia Autonomous Region by 20% this summer, and will resume production in disaster-hit areas as soon as possible.

In March when severe snowstorms hit southern China, the two companies took similar action.

CNPC has ordered its international business division to ensure processed oil imports, and Sinopec said it would continue to import oil. As for exports, the companies would only meet the minimum demand of the Hong Kong and Macao airports.

Rocketing crude prices and a series of disasters and major events have put great pressure on China's oil producers and refiners. Although the government has given large amounts of allowances, the firms have been falling deeper into the red every day. Furthermore, the major earthquake to hit the gas-rich Sichuan Province will affect CNPC and Sinopec's gas and oil projects.

CNPC recently received approval to build a multibillion-dollar refinery and ethylene project in Sichuan after two decades of preparation. CNPC also had plans to develop more capacity in its Sichuan gas fields. These gas fields, if finished in 2008, can increase the company's capacity by 10 billion cubic meters a year.

Last year, Sinopec gathered about $3 billion for construction of a gas-transmission project to pipe Sichuan gas to eastern China.

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