China to roll out new gas standards

China has decided to upgrade its gasoline quality amid mounting worries that substandard oil products may have caused the murky haze shrouding large parts of the nation, according to a statement released Wednesday after a State Council executive meeting.

Higher standards for petroleum and diesel are urged within periods of time specified by the statement, which further noted that prices of upgraded oil products will be set at an appropriate level, and relevant subsidy polices will also be unveiled to offer aid to people and public sectors in need of financial help, as it is widely believed the upgrading will result in a spike in oil prices.

China will introduce National Standard V for automotive diesel fuel by June and similar specifications for gasoline by end-2013, the government said.

Ahead of these moves, China will soon launch National Standard IV for automotive diesel, similar to Europe's IV quality with a sulfur content of 50 parts per million (ppm), according to a statement on government's website.

The new National Standard V - similar to Euro V with a sulfur content no greater than 10 ppm - will become compulsory by the end of 2017, and the National Standard IV for diesel by the end of 2014, the government said, to allow oil refiners time to upgrade their facilities and the market time to phase out old vehicles.

Once the new specifications are published, the government will allow price premiums for higher quality fuels versus lower quality ones, according to the government circular, as a motivation to oil firms to quickly start producing cleaner fuels.

Automotive diesel, burned by trucks and buses, forms just over half of China's total diesel market of about 3.6 million barrels per day.