Sinopec, the country's largest oil refiner, said it believed it
would not receive a large subsidy this year from the government,
reported Friday's Shanghai Securities News, a newspaper
run by Xinhua News Agency.
Sinopec received government subsidies of 10 billion yuan
(US$1.36 billion) and five billion yuan respectively in 2005 and
2006 to cover losses incurred in running its refineries. The losses
are caused in the most part by the yawning gap between domestic oil
product price and the rising international crude price.
Official figures showed that about 70 percent of the crude oil
consumed by the company was imported, and its refinery capabilities
accounted for more than 52 percent of the country's total in
2006.
PetroChina, the country's biggest oil producer and second
largest refiner, whose refining capabilities accounted for 37
percent of the nation's total in 2006, received no such subsidies
in the past two years as its businesses were composed of oil and
gas exploration, development and production, pipeline construction,
crude oil and oil products trading besides refining.
There was a report in Thursday's China Securities Journal that
Sinopec and PetroChina were considering lobbying the government to
grant them subsidies because of losses from their oil products
importation and refining operations.
Sources from Sinopec told Shanghai Securities News that the
government would base its approval of subsidies not on the
performance of one sector of the company's businesses but would
take the company's overall operation into consideration and even if
the government would grant a subsidy, the amount would not exceed
the five billion yuan of 2006.
"Sinopec's whole year loss from its refining business might
stand around eight billion yuan, less than the 10 billion yuan loss
of last year," predicted Qiu Xiaofeng, an analyst with China
Merchants Securities.
(Xinhua News Agency December 15, 2007)
