August crude oil processing volume fell

Continue to operate at a high level of over 30 million tons; industry sources said it is driven by the new refined oil pricing mechanism

Statistics released yesterday showed that the crude oil processing capacity of refineries in August increased by 7.2% from the same period last year to 34.73 million tons, a slight decline compared with July, but still maintained a high level of more than 30 million tons. According to industry insiders, the high crude oil processing volume is not driven by domestic demand, but is caused by the new refined oil pricing mechanism. In the long run, the supply of domestic downstream gasoline and diesel will exceed demand.

Li Li, an analyst at CBI, said that the monthly crude oil processing volume figures are not sufficient to illustrate the problem. In terms of absolute quantity, the processing volume has remained high since the fourth quarter of 2009.

Officials of the National Development and Reform Commission said that most of domestic refining capacity was consumed by automobiles last year. According to Li Li, the current increase in crude oil processing by the two major domestic oil companies is entirely driven by production rather than demand, because the new oil pricing mechanism guarantees The refining company's oil refining profits and the refining business do not lose money, so the amount of refining processing has remained high.

In May 2009, the “Administrative Measures on Oil Prices (Trial)” promulgated by the National Development and Reform Commission was referred to as the domestic new refined oil pricing mechanism, which guaranteed the refinery profits of the oil companies.

Before the implementation of the new pricing mechanism, due to the loss of the refining business, frequent “oil shortages” occurred across the oil peaks. “We did not say which industry’s profits are policy guarantees that must be profitable. Although previous oil refining was a loss, oil companies were generally profitable. The current situation is not normal,” said one person who declined to be named.