Sinopec, China's biggest oil refiner, will subsidize refined oil products by its refineries starting in March in an effort to encourage oil product exports, a person from a Sinopec refinery told National Business Daily on Monday, saying the subsidy was 130 yuan ($19) per ton.
The subsidy will be paid by China International United Petroleum & Chemicals Co Ltd, a wholly-owned subsidiary of Sinopec, according to analyst Liao Kaishun from C1 Energy, an energy information website. Liao said C1 obtained the information from some costal refineries of Sinopec.
This subsidiary company, China's biggest oil trader, undertakes Sinopec's international oil trading business.
This may be the first time Sinopec is using an internal subsidy to encourage oil product exports, Liao said, adding that the policy may last until the balance between domestic supply and demand for oil products is resumed.
Currently the domestic demand for oil products is sluggish whereas the stock is high. According to statistics, January's inventory of petroleum, diesel and kerosene by China's two oil giants, Petro China and Sinopec, increased 3.0 percent month-on-month while the oil products sales decreased by 6 percent.
