Unparalleled Diesel Shortage in China   

By Lily Wang   

China battles against unparalleled shortage of diesel in the southern and eastern region. Around 2 000 stations have shut down due to a lack of diesel.
   Power blackouts are one of the factors directly led to the diesel shortage as some local governments switch electricity off to reduce emissions and meet the government's energy-saving targets.
   The Chinese government has set targets of reducing energy consumption per unit of GDP by 20% during the 11th Five-Year Program period (2006-2010) on the 2005 basis. However, the nation's energy consumption per unit of GDP reportedly fell 15.61% as of 2009. And in the first half of 2010, the energy consumption per unit of GDP reversed to lift 0.09%, indicating that in the second half, the country should cut energy consumption per unit of GDP by 4.48%.
   "No one can estimate the huge impacts coming out of the energy-saving and emission-reducing brought plants abnormal operations," said Mr. Zhao Zhiping, a senior manager of petrochemical industry, "These plants had to purchase generator and diesel to generate electricity by themselves to maintain normal operation after some local governments rationed the supply of electricity from September."
   "But the situation will increasingly throw impacts on the energy-saving and emission-reducing," stressed Mr. Zhao.
   The government has not posted consumption of electricity and coal for two months - September and October, commented Zhao.
   In addition, the growing demand and supply reduction are additional factors for diesel shortage.
   In the fourth quarter every year, demand for diesel in China is increasingly growing compared with other quarters, especially driven by power stations, logistics and civil uses.  
   Furthermore, with the soaring global crude price, the unmatched domestic oil products prices set by the government lessened refineries' profits and even caused loss. Subsequently local refineries cut their oil products output from July or August. Overhaul for refineries generally required in August and September is also a factor of reduction of diesel supply.
   Currently China's top two oil refiners PetroChina Co and Sinopec Corp are boosting their diesel production to tackle the unparalleled diesel shortage in the Chinese market.
   PetroChina processed 12.15 million tons of crude in October, up 7.4% year-on-year. As of November 3rd, it daily processed 400 000 tons of crude, hitting historic high. PetroChina plans to produce 168 000 tons of diesel per day in November to meet the market needs.
   Sinopec Corp makes efforts to offer fuel to the domestic market. It will supply diesel of 850 000 tons in November. The oil refiner also aims at importing 200 000 tons of diesel following a batch of recent measures to increase supply.