BEIJING - China Petrochemical Corp (Sinopec), the country's largest oil refiner, said it will boost refinery capacity next month to ease a severe diesel shortage.

Private-sector gas stations, which account for 45 percent of the country's total, are experiencing a massive shortfall of the fuel. Many refiners have been running at low capacity, caught between surging crude oil costs and government cuts in retail diesel prices.

Sinopec will raise its refinery runs by 2.8 percent to 18.3 million tons in November, the company said in an e-mail on Tuesday.

That would be 590,000 tons on a daily basis, the second-highest ever, it said, adding that is the equivalent of 4.3 million barrels a day.

The company will cut chemical feedstock production to produce more diesel and may postpone refinery maintenance, according to the statement.

The refiner has this month boosted daily sales to a record of 280,000 tons a day to meet demand, it also said.

Sinopec's refineries are operating at full capacity, it said. October oil processing will be 18.05 million tons, similar to the level handled a year earlier.

"The increasing capacity will help ease the shortage as soon as Sinopec raises refinery runs in November," said Han Xiaoping, chief information officer of China5e.com, a Chinese energy website.

"Surging raw material prices have squeezed private refiners' profits, pushing them to run at low capacity."

Diesel shortages arise every September and October, the traditional peak months for diesel use. But the shortfall is worse than usual this year.

More than 10,000 of China's private-sector gas stations face diesel shortages, media reports have said. There are 44,005 of these stations in China, or 46 percent of the total, according to the Commercial Petroleum Flow Committee of China.

The National Development and Reform Commission (NDRC) cut retail fuel prices for the first time in 16 months by 300 yuan ($47.30) a ton on Oct 8.

Gas output boost

Sinopec, China National Offshore Oil Corp and China National Petroleum Corp plan to boost natural gas supply by 20 percent to about 58.6 billion cubic meters this winter, the NDRC and the National Energy Administration said in a statement on Tuesday.

That amount of resources can basically satisfy demand, according to the statement.

The nation's natural gas supply rose 20 percent to 93.7 billion cu m in the first three quarters this year, the statement said.

China Daily - Bloomberg News

(China Daily 10/26/2011 page15)