China’s private oil companies to receive 5 mln-ton state oil stockpile

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China's regulator, the National Development and Reform Commission (NDRC), is drawing up plans for a 5 million-ton product oil stockpile for struggling private oil companies, according to the China General Chamber of Commerce The Chairman of the chamber’s oil distribution committee, Zhao Youshan, said at a news conference that the NDRC was hoping to complete the project by October this year.

He added that the regulators had not yet agreed on the specific methods that will be used to supply the oil. While it is unlikely that the state will force the major refiners, the China National Petroleum Corporation (CNPC) and the China Petroleum and Chemical Corporation (Sinopec) to provide oil to the private firms, the government could buy the oil from the two companies and sell it on at a fixed price.

Fixed local oil-product prices mean that the refiners are forced to operate at a loss when the global crude price exceeds that of around $60 a barrel. Last week, the NDRC again refused demands by the big state-owned firms to lift wholesale and retail prices. China’s two state-owned refiners decided last month to cut off supplies to private gas stations and give priority to their own sales networks. Currently, about 10,000 of the total 50,000 private oil retail stations are facing closure because of product oil shortages, the China General Chamber of Commerce added. (petrolplaza)

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