China must increase the amount of crude oil it processes by five per cent from 2005 levels if it is to guarantee meeting growing demand for fuel this year, a top energy policy making body said.

China processed 286 million tonnes of crude last year, but must refine an additional 15 million tonnes to meet an expected 5.4 to seven per cent increase in consumption of oil products this year.
A planned increase of 17 million tonnes in refining capacity at plants belonging to the country’s oil majors should mean this can be achieved, the National Development and Reform Commission (NDRC) said in a statement.
However if exports of refined products continue at high levels, China may face a new round of shortages like the ones that hit in the south east last summer.
Refiners had increased shipments of fuel abroad because tight caps on retail prices meant they lost money on domestic sales, but Beijing brought out a series of export curbs that stopped the flow overseas and helped end the shortages.
It has now revoked some of those measures, even though prices remain far below global levels, reigniting risks of shortfalls.
“If exports of oil products continue at the high levels seen last year, or are increasingly driven by profit, then refining capacity will be strained and the supply of oil products will still be tight,” the statement said.
The industry swung from a 20.8 billion yuan ($2.58 billion) profit in 2004 to a near 30 billion yuan loss last year, the statement said.
China's refineries had a total capacity of 328 million tonnes at the end of 2005, and ran at an average 87 percent capacity over the year -– even though the NDRC estimates that overall demand for oil nudged down that year.
Plants belonging to majors Sinopec and PetroChina  – which are keen to consolidate their market position and subject to government pressure – took most of the strain, running at over 95 per cent capacity through the year and reaching nearly 100 per cent some months, the statement said.
Local refineries ran at less than 60 per cent, the NDRC added.  It was not clear if this included the smallest plants, which often process fuel oil because they have no access to tightly controlled crude supplies.
Although the majors’ refineries have little room for extra production, around 13 million tonnes of new capacity is scheduled to come on line at Sinopec refineries, and 4 million tonnes at PetroChina plants, the statement said.