December 20th, 2008 | China Daily Reserves, losses piling up for Sinopec
China Petrochemical Corp, or Sinopec, known as the country’s biggest oil refiner, may lose 230 billion yuan in its refining business this year because government controls on oil prices prevent the company from passing on higher crude costs to consumers.
Sinopec sold its fuels including gasoline and diesel at prices lower than its costs of crude oil purchased for 283 days of this year even though global crude prices fell in recent months, Wang Xiaoqi, head of planning and development at the State-owned Assets Supervision and Administration Commission, said at a forum hosted by Tsinghua University on Friday in Beijing.
“The company’s refining operations will still suffer from a 180-billion-yuan loss even though the government granted a subsidy of 50 billion yuan,” Wang said.
Sinopec will face a “tough market environment” in the first quarter of next year because of weaker demand for fuels and petrochemicals, the company said in statement earlier this month.
Stockpiles at Sinopec are “unreasonably high”, according to the statement.
China cut its domestic ex-factory and retail prices of oil products on Friday to reflect the decline in crude oil prices.
The price of gasoline was cut to 5,580 yuan from 6,480 yuan per ton, and diesel to 4,970 yuan from 6,070 yuan per ton. The price of jet fuel was lowered by nearly a third to 5,050 yuan from 7,450 yuan per ton.