The country's two largest oil companies PetroChina and Sinopec will increase fuel production and distribution to ensure supply, the National Development and Reform Commission (NDRC) said on Monday.

Rapid economic development in the first two months, especially reconstruction after the snowstorms in some regions, caused demand for refined oil products to rise. Fuel supplies have also tightened, as some retailers hoard fuel in hopes of profiting from potential price gains, the NDRC said.

"The country enjoys sound production and supply of refined oil products. It will not undergo a nationwide shortage of fuel, such as the diesel shortage suffered in November and December," it said in a statement.

In the first two months, refined oil production increased by 10.5 percent, and the fuel stockpile increased by 28 percent.

China's largest refiner Sinopec said yesterday it would reduce the production of aromatics from crude to increase its output of gasoline to ensure market supply of the fuel.

Aromatics are used to make computer casings and polyester fibers.

The Beijing-based company has been running all its refineries at full capacity amid losses caused by record crude prices. Its Zhenhai refinery could lose as much as 12 million yuan (US$1.7 million) by reducing its output of the more-valuable chemical, Sinopec said.

The group's Maoming refinery in Guangdong Province is boosting its daily crude processing to 36,000 tons, exceeding its designed capacity.

Last November and December, many regions in China grappled with shortages of refined oil products, such as diesel. The government has ordered refiners to run their plants at full capacity.

PetroChina and Sinopec have also been urged to increase fuel imports to boost supply. Sinopec imported more than 400,000 tons of diesel last December.

PetroChina imported over 300,000 tons of oil products in the first three quarters.

China imported 1.62 million tons of diesel last year, up 130 percent from 2006.

Although large oil producers increased oil product imports late last year, China imported 33.8 million tons of oil products in 2007, down more than 7 percent from 2006.

(China Daily March 25, 2008)