Tax will be levied from August 1 on crude oil exports by foreign
partners in offshore exploration joint ventures, the government
said yesterday.
But it will grant companies a five-year holiday from the 5
percent export tariff if they are executing contracts they have
already inked with Chinese partners, the Ministry of Finance and
the General Administration of Customs said.
"The move is aimed at saving domestic resources and bringing the
policy for foreign companies in line with that for domestic
operators," Gong Jinshuang, a senior analyst at the economic and
technology research institute affiliated to the China National
Petroleum Corp, told China Daily.
China started to levy export tariffs from November on exports of
resource-intensive products, such as oil and metals.
Analysts said the policy was to save scarce resources and
energy, and dampen their exports. As international oil prices
soared last year, some companies opted to export crude despite the
fact that China needs to import more than 40 percent of its
domestic crude consumption.
August supply of Brent crude was fetching US$75.55 a barrel on
the ICE Futures exchange in London yesterday.
It rose to an 11-month high to above US$76 a barrel on Monday as
rising global oil demand and North Sea field maintenance
exacerbated supply worries.
Levying taxes on crude exports is a general practice in many
countries, said Han Xiaoping, an energy analyst with China5e.com, a
major energy website. "Chinese oil companies in other countries
also pay such taxes."
The new policy will also provide a level playing field for
domestic and foreign companies, which is in line with World Trade
Organization principles, he added.
China's crude exports, including those by foreign joint
ventures, in the first half of this year were 1.82 million tons,
down 39 percent over a year earlier, according to Customs data.
(China Daily July 11, 2007)
