TWO of China’s biggest oil suppliers have begun to ration diesel, triggering lorry queues at petrol stations across two of the country’s most prosperous provinces. Such was the demand that the state-run oil giants Sinopec and PetroChina set a limit on customers of 25 to 50 litres a visit.

The rationing appears to be restricted to the southeastern provinces of Zhejiang and Jiangsu, two of the most dynamic regional economies in the world’s second-largest oil consumer. One driver at a petrol station in Zhejiang was astonished at the queues: There are no shortages in neighbouring Fujian province, he said.

Speculation has been building for weeks that the Chinese Government was ready to allow an increase in petrol and diesel prices and the public reaction was swift as news, and rumours, of the rationing spread across Zhejiang.

Some pumps in the province are reported to have run dry. The owner of a private transport firm in the eastern Zhejiang port city of Ningbo said: “Our drivers are stranded here because both the Sinopec and PetroChina petrol stations next door told us they ran out of diesel.”

However, this latest bout of rationing has been less serious than a supply crunch last summer that hit most eastern and southern regions in the country for about two weeks. An official with Sinopec in the Jiangsu provincial capital of Nanjing said: “What’s different this time is that stockpiling, not supply shortage, is the cause of queueing and rationing.”

The squeeze last August was led by a surge in fuel exports. State refiners boosted overseas sales to rescue slumping domestic margins caused by the Government’s cap on pump prices.

The Sinopec official said that the company was better prepared this time: “Stocks are below normal, but we still have oil to supply.” He said the company’s inventories could last another five days, against a typical stock of seven to ten days.

Speculation has grown this month that Beijing will announce a retail price rise in petrol within days, now that the annual session of the National People’s Congress, the parliament, has ended. China avoids policy changes during parliament — to reassure its 1.3 billion people that the Government is moving smoothly to ensure a better standard of living.

A price increase would be the first since last July, when prices were raised about 15 per cent — while crude prices had increased more than 30 per cent. China has kept a lid on price increases, fearing inflation and possible social unrest. The diesel price is particularly sensitive because it accounts for one third of all Chinese oil demand. It is the main fuel used by farmers, who have gained least from economic reform, and who are most vulnerable to sudden price swings.

Remarks at the weekend from officials of the People’s Bank of China, the country’s central bank, that inflation of 0.9 per cent was a comfortable level, fuelled the rumours that the Government was ready to raise the price of oil products. The Government has been coming under increasing pressure to raise prices to boost profits at loss-making state refiners and to cap runaway demand.

PetroChina, Asia’s top oil and gas company and the country’s second-biggest refiner, unveiled a 23 per cent jump in second-half profits yesterday as it sold more oil at higher prices to energy-hungry China. A refining loss of 19.81 billion yuan (£1.41 billion), as a result of the country’s price controls, took a bite out of the profit figure, but, nevertheless, PetroChina’s coffers are bulging after last year’s record run-up in crude oil prices. The company is expected to pursue its quest for more global oil reserves by buying PetroKazakhstan from its parent company China National Petroleum.

PetroChina earned 133.36 billion yuan for the full year, compared with a marginally revised 103.84 billion yuan in 2004. The rise in profits was thanks to a 44 per cent surge in oil selling prices.

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