February 14, 2009 at 3:39 pm #3186
China May Approve Refining Stimulus to Help Economy (Update1)
By Wang Ying
Feb. 13, 2009 (Bloomberg) — China, the world’s second-biggest energy consumer, may approve a stimulus plan for the oil refining and petrochemicals sector by next week to help spur the slowing economy, two industry officials said.
The proposal, which includes tax incentives and the acceleration of project constructions, has already been submitted to the State Council, two officials at the government- backed China Petroleum and Chemical Industry Association, who declined to be identified because of internal rules, said today. The cabinet will decide on the final plan, said the officials, one of whom participated in the drafting of the proposal.
China’s economy, the world’s third largest, expanded at the slowest pace in seven years in the fourth quarter of 2008, cutting consumption of fuels and petrochemicals. The plan for the energy sector will add to the 4 trillion yuan ($585 billion) of spending that the government announced in November to support the economy amid the global recession.
“Demand should start to pick up in March or April as the stimulus measures take effect,” Wang Aochao, an analyst at UOB Kay Hian Ltd., said by phone from Shanghai.
The draft plan proposed that the government take advantage of low prices and stockpile oil products to help reduce an oversupply in the domestic market, one of the officials said. It was proposed that the state build a reserve of 10 million metric tons of fuels by 2011, he said. The officials didn’t give the value of the stimulus package.
“We expect measures to boost output efficiency at refineries and an increase of tax rebates for the exports of some petrochemical products,” said Wang.
China may raise the trigger level of a windfall tax levied on the nation’s oil producers to $60 a barrel from $40, China Business News reported on Feb. 10, citing an unidentified industry “expert.”
The National Development and Reform Commission, the country’s top planner, is making plans to support PetroChina Co. and China Petroleum and Chemical Corp., including possibly subsidizing them for their losses from refining oil, the Shanghai-based newspaper said at the time.
Shares in China Petroleum, the nation’s biggest oil refiner, gained 3.8 percent in Hong Kong to close at HK$4.41. Rival PetroChina climbed 3.1 percent to HK$6.37. The Hang Seng Index was up 2.5 percent.
China’s new loans rose by a record in January and money supply expanded at the fastest pace in more than a year as the government pressured banks to support stimulus plans, the People’s Bank of China said yesterday.
The government will build six energy projects this year under the 4 trillion-yuan spending plan, the National Development and Reform Commission said in a statement on Nov. 12.
The projects include 10 nuclear power reactors with a capacity of 1,000 megawatts each in the eastern provinces of Fujian, Zhejiang and Guangdong. PetroChina will start building a 10-million-metric-ton-a-year refinery in Chengdu in Sichuan province, it said then.
To contact the reporter on this story: Wang Ying in Beijing at firstname.lastname@example.org.
Last Updated: February 13, 2009 03:22 EST
February 14, 2009 at 3:48 pm #6245
Here is update on how China is applying Stimulus – only they are serious about their Energy problems! China is putting some additional funding on-top of the current ( November approved $US 585 Billion ~75% of what total US Stimulus $US 787 Billion) towards their oil industry. Using the financial crisis as little cover it is fast forwarding the government owned sector of Oil & Energy sectors that already receive an annual bailout of several $billion for last 4 years to cap Diesel & Gasoline prices below $0.90/gallon despite crude prices in the $60-140/Bbl levels using a “one time only” subsidy that is wearing thin after nearly 5 years in row counting 2008.
China unlike the US in not going focus on expensive unreliable inefficient (stupid) Wind, Solar, Electric and other “Green” power but solid sustainable dependable Oil/Petrochemical industry, increasing SPR Reserves & more Nuclear plants!
So guess US will be buying all shortfall gasoline production it is creating now – with all cancled US Refinery & Coker expansion canceled or delayed projects as result of recent Obama executive orders : canceled US offshore drilling, higher ETOH blending, individual States Emissions (& you thought 14 separate Gasoline specs were lot! Ha) and the potential Carbon Tax & joining Kyoto to come later, plus the Democratic Stimulus with its Anti-Oil pro Green focus – no support Oil, Nuclear or Clean Coal but lots Wind & Solar.
Tell me again how that creates jobs in US ….. especially since most Wind & Solar parts are made in China??
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