Chinese majors are investing $7.2bn in cleaner fuel technology as China IV standards become ubiquitous by end-2013.
Sinopec garage Image: China.org |
China’s top two oil companies, Sinopec and China National Petroleum Corporation (CNPC have announced they will spend a combined total of 45bn Yuan ($7.2bn) on upgrading the quality of fuel they refine.
Both companies have been under pressure from the government to manufacture cleaner fuels after air pollution in Beijing reached ultra-hazardous levels for 20 days of January.
CNPC General Manager, Zhou Jiping, claimed the 15bn Yuan ($2.4bn) investment would allow the company to produce China IV and China V standard fuel.
The upgrades are in line with new government legislation that requires all gasoline sold to meet the China IV standard by the end of the year. According to Zhou, only one third of CNPC’s fuel currently meets this standard.
Fu Chengyu, the ambitious chairman of Sinopec Corp, said the company would invest 30bn Yuan ($4.81bn roughly half of its annual profits, on a series of upgraded desulphurisation facilities. The 12 plants will come online by the end of 2013 and will be fully capable of producing oil products that meet the China IV standard.
According to Zhou, the State Council, China’s cabinet, has outlined plans to make all fuel China V standard, currently adopted by Beijing alone, by 2017. As state-owned companies, CNPC and Sinopec are likely to receive subsidies from Beijing to help them cope with the rising costs. Nonetheless, some are still anxious the rising costs will be passed onto motorists, potentially affecting inflation.