Chinese oil giant defends supply efforts amid fuel shortage

Shortages are causing long lines at filling stations and disrupting
trucking of goods.

By JOE McDONALD, The Associated Press November 5, 2007

BEIJING — China’s No. 2 oil company defended its efforts to
meet the booming economy’s fuel needs amid diesel shortages
that have led to rationing, public criticism of suppliers and a gas
station brawl where one man was killed.

Shortages have caused long lines at filling stations and
disrupted trucking in export-driven coastal provinces. The
country’s state-owned oil companies blame a scarcity of refining
capacity due to price controls, but some customers and Chinese
media have accused them of creating a phony crisis to force
regulators to raise retail prices.

China Petroleum & Chemical Corp., known as Sinopec, said on
its Web site Wednesday that producers were “painstakingly
organizing resources to get them to market” and also importing
fuel.

“Sinopec is continuing to take energetic measures and striving to
resolve the current situation of tight diesel supplies in some
areas,” the company said.

Sinopec said it would import more oil in November to “stabilize
the domestic market” but gave no information on when the
crunch might ease. Sinopec is second in size only to the China
National Petroleum Corp.

Trucking companies say the rationing, which limits customers to
as little as a quarter-tank, has raised costs and delayed
deliveries. The impact on China’s trade-dependent economy is
unclear.

In Xin Yang, a city in the central province of Henan, a man was
beaten to death after he cut in line at a gas station, said the
Dahe newspaper, which is based in the capital, Zhengzhou.
Police confirmed the case.

“Two drivers had a fight because one of them wanted to jump a
line when everyone was waiting to get gas,” said an officer from
the Xin Yang police who would give only his surname Li.

“The man was hurt and sent to the hospital where he died. The
case is being investigated,” he said.

China has risen in recent years to become the world’s second-
biggest oil consumer after the United States, propelled by
economic growth that is expected to top 10 percent this year for
a fifth straight year.

Government oil companies have spent billions of dollars to
secure access to foreign oil and gas, leading to criticism of their
willingness to deal with such isolated governments as Iran and
Sudan.

Sinopec said China’s diesel supplies this month have risen by
4.3 percent over the same period last year, amounting to an
additional 3.5 million barrels.

Chinese oil refiners are losing money due to government
controls that have frozen the retail price of gasoline and diesel,
preventing them from passing on soaring crude costs to
consumers.

Sinopec acknowledged that refiners that have suspended
operations due to rising costs were partly to blame for the
shortages. But it said they also were caused by mounting
demand.

Copyright © 2007 Blethen Maine Newspapers