China National Petroleum buys 55 percent stake in major ethanol producer Tianguan Group

China National Petroleum Corp (CNPC) has bought a 55 percent stake in Tianguan Group, a major Chinese ethanol producer based in Henan Province. Reportedly, a concern prompting the investment is the potential that the Chinese government might establish a renewable energy mandate.

CNPC announced in September it would invest US$1.34 billion in renewable energy by 2020. CNPC has built 88 ethanol blending facilities and an 85 Mgy ton ethanol plant.

Yesterday, fuel riots were reported in China because of shortages. The shortages are affecting Shanghai, the southeast coastal provinces, and are spreading to the interior. Diesel is fixed-priced at $2.42 in China, about one third of the price in European markets, and fuel companies are getting squeezed by soaring crude oil costs, leading to production cutbacks and allocations. Prices have not been raised for 17 months despite crude oil rices nearly doubling.

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