China's biggest oil company to produce cleaner fuel

China National Petroleum Corp will spend 15 billion yuan to upgrade the quality of fuel it refines.

China National Petroleum Corp, the nation's biggest energy company, will spend 15 billion yuan to upgrade the quality of fuel it refines, its general manager Zhou Jiping said.

The money would allow CNPC to upgrade the standard of its fuel to China IV from China III, Zhou said in Beijing at annual meetings of the Chinese People's Consultative Conference. The cost of upgrading to China V from IV would be less, he said.

China's largest oil companies have announced plans for billions of yuan of upgrades after air pollution in the Chinese capital hit hazardous levels on 20 days in January. China Petrochemical Corp chairman Fu Chengyu said in an interview with state broadcaster China Central Television last month that the nation's biggest refiner would spend about 30bn yuan a year to upgrade its plants to produce cleaner fuel.

The nation should also aggressively increase the use of natural gas so that it accounts for a greater percentage of total energy usage, Mr Zhou said. China should exploit both conventional and unconventional natural gas, he said, adding that the company will see more gas output from its fields in Qinghai, Sichuan and Talimu as well as Changqing.

Beijing tightened emissions criteria for new cars from February 1, becoming the first city to adopt the China V standard that caps sulfur content at 10 parts per million. China IV standard caps sulfur content at 50 ppm.

All gasoline sold will have to be at the China IV standard by the end of this year, Mr Zhou said. Diesel will have to be at the same standard by the end of next year, he said. The State Council, China's cabinet, said February 6 that all fuel will need to be at the China V standard by 2017.

About a third of CNPC's fuel is at the China IV standard now, according to Mr Zhou.

* Bloomberg News