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Fuel price hike 'not enough': Sinopec

(SD-Agencies)
Updated: 2006-05-26 13:47

China Petroleum & Chemical Corp, Asia's biggest oil refiner, said the decision to raise fuel prices won't end a year of refining losses caused by higher crude oil costs, according to a Shanghai Daily report Thursday.

"It's not enough yet," Chairman Chen Tonghai said at a shareholders meeting in Beijing on Wednesday, after the government increased the price of gasoline Tuesday by 10.6 percent, diesel by 12.3 percent and jet fuel by 10.3 percent.

Retail gasoline prices in China have gained 18 percent this year, lagging behind the 40 percent increase in Singapore, Asia's biggest oil-trading center. Sinopec had a 7.88 billion yuan (US$982 million) operating loss from refining in the first quarter because of government price controls, designed to shield consumers and companies from rising energy costs.

PetroChina had a refining and marketing loss of 19.8 billion yuan last year, compared with a profit of 11.9 billion yuan in 2004, the company said March 20.

In Asia's free markets, refiners' profits from turning crude oil into gasoline, diesel and other products rose to a nine-month high after plant shutdowns increased demand from countries such as Australia, Japan and Indonesia.

"The price hike is not going to completely ease our refining losses," Zhang Jingming, company secretary at Sinopec Shanghai Petrochemical Co, China's largest ethylene maker, said in a telephone interview Wednesday. "An increase of about 1,000 yuan a ton would have eased the losses."

Zhang said he expects to "eventually see domestic prices moving in line with international levels."