The nation's top oil and gas company PetroChina has asked the government to increase fuel prices to reduce its refining losses from high crude costs on the international market.
The producer proposed adjustments to refined product prices, PetroChina President Jiang Jiemin told reporters in Hong Kong.
"The break-even point of our refining business was at about $66 to $67 a barrel of crude for each dollar gain beyond that level, we will lose 3.24 billion yuan in a full year," he said.
The company has also asked the government to cut fuel import tariffs.
PetroChina's refining business saw a loss of 20.68 billion yuan in 2007, representing a reduced loss of 8.48 billion yuan compared with the previous year.
Chinese refiners are all making losses due to gaps between soaring world oil prices and low government-set domestic fuel prices. Regions in southern Guangdong province, including Guangzhou and Shenzhen, have seen gasoline and diesel supply shortages recently.
But analysts say the government is reluctant to raise fuel prices due to the high consumer price index.
Earlier this month, the National Development and Reform Commission urged refined oil suppliers not to raise prices despite climbing global oil costs, as it tries to curb inflationary pressure.
PetroChina is the country's second largest refiner. The biggest refiner, Sinopec, said yesterday it will receive 12.3 billion yuan in government subsidies to ward off oil processing losses.
Sinopec will book 4.9 billion yuan of the subsidies in its 2007 accounts and 7.4 billion yuan in the first quarter of this year, it said in a statement yesterday.
Last week, the refiner denied a report that it's likely to post losses in the first two quarters on high crude costs.
Company sources said its refining business is making a loss, but that doesn't reflect its situation overall.
(China Daily March 21, 2008)
