Chinese refining majors lose $831 million in H1

Refineries under China’s two oil majors are estimated to have incurred 5.71 billion yuan (US$831 million) in losses in the first half of 2008 as a result of skyrocketing international crude oil prices, regulated domestic products markets and vibrant production growth, a report said on July 22. To the end of June, estimated losses incurred by refineries operated by China National Petroleum Corporation (CNPC) and China Petrochemical Corporation Group (Sinopec) were 47.9% higher than a year earlier. Though the Chinese central government raised retail prices of gasoline and diesel in June by 1,000 yuan (US$145.54) per metric ton, representing an increase of 16-18%, it was not sufficient to offset the domestic refiners financial losses, said China Energy Research Society Deputy Director Zhou Dadi. The increase has only helped narrow the gap between record-high international crude prices and artificially low refined oil products prices in China’s domestic market, but it will not put refiners back in the black, he added. The government is also giving the two oil giants a hand by subsidizing some of the crude and products they imported in the second quarter of this year in the form of a value-added tax rebate. (July 23, 2008)