Bloomberg News

China’s 2008 Refining Losses Reach $29 Billion, Xinhua Says

March 03, 2009

China’s biggest oil companies recorded 200 billion yuan ($29 billion) of refining losses in 2008 because of government caps on fuel prices, Xinhua news agency reported, citing the State-owned Asset Supervision and Administration Commission.

Losses at electricity suppliers and China’s power grid operators were 66 billion yuan, Xinhua said, quoting a statement from the commission, which didn’t identify the companies.

Huang Wensheng, a spokesman for the country’s biggest refiner China Petroleum & Chemical Corp. (386), said he was unaware of the figures and the company has yet to publish its annual results for 2008. Sinopec, as China Petroleum is known, is the Hong Kong-listed unit of China Petrochemical Corp.

Mao Zefeng, the spokesman for China’s biggest energy company PetroChina Co. wasn’t immediately reachable for comment by telephone. China National Petroleum Corp. is the parent of PetroChina.

Sinopec said in a statement in January profit for 2008 will fall by more than 50 percent because government caps on fuel prices prevented the company from passing on the rising cost of crude oil to consumers. The company’s profit in 2007 was 56.5 billion yuan.

The Chinese government cut fuel prices charged to the public in January 2007 and in December 2008 to reflect declining global oil prices and to reduce costs for refiners and factories as the economy slows. A guidance band for retail fuel prices was also replaced last year with a market-based ceiling that takes into account the cost of crude oil.

To contact the reporter on this story: John Duce in Hong Kong.

To contact the editor responsible for this story: Amit Prakash

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