Unipec Halts Diesel Imports for a Third Month on Local Supplies

By Winnie Zhu

Sept. 23 (Bloomberg) -- China International United Petroleum & Chemical Corp., the nation's largest oil trader, will halt diesel imports for a third month in October because of increased domestic output, said an official familiar with the purchases.

Unipec, as China International is known, will extend the halt that started in August after higher prices spurred domestic production, said the official, who declined to be named because of internal rules. The company hasn't decided on November imports, he said.

China, the world's second-largest energy consumer, raised gasoline and diesel prices by about 18 percent on June 20, which encouraged refiners to increase supplies and reduce inventories. China's worst fuel shortage in more than two years has eased, the nation's top energy regulatory said in August.

`Domestic supplies are more than adequate to meet demand after refiners stockpiled ahead of the Olympics Games and boost production,'' Yao Daming, an oil analyst with Guangdong Oil & Gas Association, said by telephone from the southern province.

The Chinese government had ordered refiners to ensure adequate supplies of fuel used to power trucks and electricity generators during last month's Olympics. China's fuel imports reached a record in July.

China National United Oil Corp., the nation's second-largest oil trader, may suspend diesel imports in October, said an official with knowledge of the company's shipments. Chinaoil, as the company is also known, didn't import any fuel in September.

China controls the cost of diesel, gasoline and jet fuel to limit their impact on inflation in the world's most-populous country, leading to a nationwide fuel shortage since the second half of last year.

Unipec is a unit China Petroleum & Chemical Corp., China's biggest oil refiner.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net.