China's top-two oil refining companies will continue to raise their output and reduce their exports of gasoline to quench the strong domestic demand caused by a rebound in transport activities after the SARS epidemic.

To relieve the domestic supply shortages, China Petroleum and Chemical Corp, better known as Sinopec, China's largest refinery, has decided to reduce its gasoline exports this month by 3 percent, compared with last month's, to 220,000 tons, Dow Jones said.

Meanwhile, September's exports of PetroChina, the country's second largest refining firm, will fall 14 percent month-on-month to 180,000 tons, according to the Website oilnews.com, which is supervised by its parent company China National Petroleum Corp.

Besides allocating more refined oil for the home market, the two refiners are also raising their processing output.

Sinopec zhenhai Refining and Chemical Co Ltd, which has the largest processing capacity in China, said the company planned to refine 1.18 million tons of crude oil this month, 30,000 tons more than its August production.

Located in Ningbo, Zhejiang Province, the refinery provides refined oil to the Yangtze River Delta and Zhujiang Delta areas.

The strong demand for refined oil, including gasoline, diesel and kerosene, was triggered in July as more energy was consumed when transport activities, including air traffic, rebounded following the end of the severe acute respiratory syndrome outbreak, according to an official with Sinopec Zhenhai. Demand is also expected to rise when a fishing ban in the East China Sea ends this month.

"Our company will produce around 200,000 tons of gasoline, 400,000 tons of diesel and 100,000 tons of aviation kerosene in September," Lin Yuefeng, an official in charge of the production planning department of Sinopec Zhenhai, said.

"More diesel will also be produced to prepare for the lifting of the fishing ban. The soaring demand for gasoline was triggered by more private cars being bought during the SARS epidemic. The heat wave of this summer was also a contributory factor."

"The production of kerosene was relatively low till the end of June as almost no airlines made orders," said an official surnamed Wang with Sinopec's Maoming Refinery, the largest refinery in southern China, which produced a quarter of Sinopec's kerosene. "That resulted in a low storage of kerosene at that time. But when airlines' orders flooded in July, our products were sold out at once," said Wang.

The strong demand for gasoline is to some extent caused by some retailers' speculation.

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