2 Mar 2010 12:17

Sinopec Group introduces subsidy to push fuel exports

Shanghai. March 2. INTERFAX-CHINA - China Petrochemical Corp. (Sinopec Group), China's largest fuel producer, will offer a subsidy to its refineries in an effort to increase fuel exports in March, an analyst told Interfax on March 2.

Liao Kaishun, with domestic market intelligence firm C1 Energy Ltd., said that China International United Petroleum & Chemicals Co. Ltd. (UNIPEC), Sinopec Group's export subsidiary, will provide a subsidy of RMB 130 ($19.03) per ton of fuel exported from its refineries in March.

According to Liao, this is the first incentive of its kind offered by Sinopec Group, triggered by a relatively high fuel inventory.

No one at UNIPEC was available to comment on the export subsidy when contacted by Interfax on March 2.

According to Xinhua News Agency figures, both Sinopec and China National Petroleum Corp. (CNPC), the second largest domestic fuel producer, saw their inventories rise for the third consecutive month in January, by 3 percent.

China exported 2.7 million tons of fuel products in January, up by 138.7 percent year-on-year, making it a net fuel exporter for the second consecutive month since December 2009.

According to C1 Energy, Sinopec Group and CNPC exports in February stood at around the same levels of those in January.

"The subsidy may not result in a measurable increase in Sinopec Group's March fuel exports, as international demand will not change much, and the impact of the subsidy on the domestic market will also be small. Export volumes of two or three millions tons is insignificant in comparison with 20 million tons of domestic consumption," Liao said.