China Petroleum & Chemical Corp., Asia's biggest oil refiner, said yesterday that it had asked the government to exempt taxes levied on the imports of crude oil and fuel to help boost profits.

If the exemptions were approved by the government, the changes would be reflected in the next-quarter report, financial officer Dai Houliang said.

The Beijing-based oil company was paid state subsidies of 45.1 billion yuan (US$6.59 billion) for selling fuel at below crude oil costs for the first nine months, according to Bloomberg News. Its net profit fell 67 percent for the period because government caps on fuel prices prevented it from passing on higher crude oil to consumers, said Sinopec, as China Petroleum is known.

The refiner's crude oil costs were about US$113 a barrel in the three months ended September 30, Dai said. The Chinese government paid Sinopec and its bigger rival PetroChina Co rebates of 75 percent on the 17-percent value-added tax levied on crude imports in the second quarter. The amount of subsidy Sinopec received in the third quarter for crude imports was less than that for the previous three months, Dai said in August.

Sinopec would cut its 2008 capital expenditure by 8.2 billion yuan due to "severe operating pressure" and "cash flow constraints," Chairman Su Shulin said on August 26.

The company would stick to its plan to cut spending and would not change its fourth-quarter expenditure budget, Dai said yesterday.

Dai said the company's refining business "has already reversed from losses based on current crude oil and domestic fuel prices." China's 2009 petrochemical demand growth would be lower than the previous years as the economy slowed, Dai said.

China raised the prices of gasoline, diesel and jet fuel by at least 17 percent in June. Sinopec hadn't received notice of further price changes from the government, according to Dai.

(Shanghai Daily October 31, 2008)