China's Guangdong province holds meeting to tackle illicit fuel trade – sources

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SINGAPORE, April 24 (Reuters) – China’s Guangdong province convened a meeting of government agencies and national oil firms on Thursday to help fight illicit trading and sales of pollutive sub-quality fuel, three sources with knowledge of the matter told Reuters.

The meeting, chaired by a vice governor of Guangdong, comes after local police detained several people including two staff of a BP Plc joint venture in connection with an investigation into suspected illicit trades of light cycle oil, a blending fuel for diesel.

Officials discussed plans to “rectify” the illicit sub-quality fuel market, as well as tackle air pollution at key cities in Guangdong, two of the sources said. The province is China’s top oil consuming province and largest by GDP.

Thursday’s meeting gathered agencies such as environmental, safety, quality inspection, customs, energy and tax administrations and marine authorities, as well as marketing officials from state refiners Sinopec, CNPC and CNOOC, according to a meeting notice reviewed by Reuters.

Representatives of shipping companies were also present.

The Guangdong government did not immediately respond to request for comment after office hours.

The meeting was chaired by vice governor Qin Weizhong, previously a refining industry veteran with Sinopec Corp and a deputy general manager of China National Petroleum Company.

Guangdong is one of the top destinations of China’s LCO imports, which last year surged to a record of nearly 16 million tonnes as traders exploited a tax loophole by importing LCO to blend into diesel.

LCO is an oil product of similar quality to diesel but is exempted by the government from the $29 per barrel consumption tax that applies to diesel, which makes LCO trades lucrative, industry sources said.

The fuel typically carries a much higher sulfur content compared with China’s prevailing diesel fuel supplied by national oil refiners.

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