August 30, 2008

PetroChina calls for fuel price hike

It is reported that Chinese 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 company has also asked the government to cut fuel import tariffs.

Mr Jiang Jiemin president of PetroChina said the producer proposed adjustments to refined product prices. He said "The break even point of our refining business was at about USD 66 to USD 67 a barrel of crude for each dollar gain beyond that level we will lose CNY 3.24 billion in a full year."

PetroChina's refining business saw a loss of CNY 20.68 billion in 2007, representing a reduced loss of CNY 8.48 billion 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.

PetroChina is the country's second largest refiner. The biggest refiner, Sinopec said on March 20th it will receive CNY 12.3 billion in government subsidies to ward off oil processing losses.