The Chinese government tries to abate the continuing fuel shortages by ordering its two major oil firms to increase their oil storage. From Reuters:
China will from May 1 require wholesalers of refined oil products to maintain stocks equivalent to at least 15 days of sales, in an effort to reduce recurrent shortages and rationing that have plagued the country for months.
China’s oil majors Sinopec and PetroChina, had already boosted their gasoline and diesel imports in April and May, from already-high March levels, as they seek to bolster stocks ahead of the Beijing Olympics.
The shortages have been caused largely by state-set pump prices, which are so low that refiners lose money on processing so cut back on their output.
Market Watch also reports that the Chinese government will give subsidies both Sinopec and PetroChina even as it continues to cap the price of oil due to worries of domestic inflation.
China’s two biggest-listed oil firms – PetroChina Co. and China Petroleum & Chemical Corp. or Sinopec – said Saturday they expect to receive a government subsidy to compensate for low fuel prices on a monthly basis starting this month.
Unlike Sinopec, it will be the first time for PetroChina, the largest listed Chinese oil firm by capacity, to receive a state subsidy to alleviate its refining losses. Sinopec received a bailout of CNY4.9 billion last year, and another CNY7.4 billion for the first quarter of this year.
Despite the government bailout, Sinopec said Saturday it expects its first-quarter net profit to fall by more than 50% from a year earlier on surging crude oil costs.