By Wang Yu (China Daily)
Updated: 2007-08-02 09:15

There is no oil supply shortage in South China, including Guangdong Province, Asia's top refiner Sinopec said yesterday in a rebuttal to recent media reports.

"Our own filling stations have enough oil supply for consumers' use. We do not see an oil product shortage at all," Sinopec spokesman Huang Wensheng said yesterday.

Sources from Guangdong Oil and Gas Association confirmed that Sinopec has stopped selling oil products to other companies and private filling stations in the province in order to feed its own outlets.

Yao Daming, an oil analyst with the association, said State-owned giants like Sinopec and PetroChina are more than capable of securing oil supply.

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However, Yao added that when global oil prices surge, there is a tendency for local dealers to store oil products and await a price hike in the local market.

"Some oil dealers are waiting for a price increase by storing more and selling less. Their action, in return, creates the impression that oil supply seems tight," Yao said.

Statistics from Guangdong Oil and Gas Association show that the wholesale price for some oil products has increased by 5 percent.

Sinopec's Huang did not endorse such figures, but he did imply that the wholesale price of major oil products, such as gasoline and diesel, is subject to adjustment by major suppliers like Sinopec and PetroChina.

An industry insider told China Daily yesterday that China's top economic regulator National Development and Reform Commission (NDRC) had decided not to increase the retail price this year.

Zhao Youshan, director of the Petroleum Distribution Committee of the China General Chamber of Commerce. said it was the right decision.

Zhao's organization represents 138 private oil companies across the country.

"The increase in oil retail price will trigger ripple effects by pushing up other commodity prices, such as grain and livestock. Therefore it is important to keep oil prices stable," Zhao said.

With the global crude price soaring and the local oil retail price under tight control by the NDRC, Sinopec will inevitably suffer from refining losses in the third quarter, said Liu Gu, an energy analyst with Guotai Jun'an Securities.

Media reports have said that some provinces in South China face a tight supply of oil products.