China seeks urban ban on high-sulfur diesel sales

BEIJING, Feb 25 (Reuters) -- China has asked local governments in 11 provinces to ban in urban areas the selling of high-sulfur diesel that is used for industrial and farming purposes rather than in automobiles, Beijing said in a policy document released on Thursday.

The request comes after China rolled out "national five" standards for gasoline and diesel on Jan. 1 in the 11 provinces in the more economically developed eastern part of the country. The standards are equivalent to Euro V specifications that allow a maximum sulfur content of 10 parts per million (ppm).

Due to lax supervision, however, "general diesel" or diesel with a high-sulfur content is still being sold at urban petrol stations in the provinces that come under the new policy, the National Development & Reform Commission (NDRC) said on Thursday.

Only kiosks in rural areas or along the rivers should be allowed to sell high-sulfur diesel, the NDRC said.

The tighter fuel standards are an attempt to tackle air pollution. Emissions from automobiles, especially from diesel-burning trucks, are one of the main contributors to the choking smog that plagues many Chinese cities.

"Along with China's accelerating fuel upgrades, the problem of having the lower-grade fuel quit the market has become increasingly prominent," the agency said.

"Especially as general diesel is being sold to automobiles illegally, marketing of (higher quality) automotive diesel has been adversely affected."

The agency requires all service stations to mark clearly the names and quality of their fuels to help motorists select the grades they want and to allow authorities to supervise fuel quality, the NDRC said.

By January 2017, "national five" will cover the whole country, it said, in line with an announcement last April that moved the roll-out up by one year.

Refiners have started boosting output of cleaner fuels, and also raised imports of diesel to 145,000 tons in January as recorded by customs data, despite an overall domestic surplus that has turned China into a leading exporter of the fuel.

Traders said the rare imports, which were about 20% of the diesel China exported last month, were driven in part by the need to meet the cleaner fuel standards.

China, the world's largest fuel user after the United States, has more than 90,000 petrol stations. Nearly 60% of them are owned or run by dominant state refiners Sinopec and PetroChina, the rest by smaller state oil companies like Sinochem and independents.

The big state refiners say they have spent billions of dollars upgrading facilities to make the cleaner fuels.