By Xiao Wan (China Daily)
Updated: 2007-07-18 09:43

Refining losses

International crude oil prices have hovered above $70 a barrel in recent weeks, squeezing profit margins for local refiners.

"If the trend continues and the price for local oil products doesn't increase, domestic oil companies will see widening refining losses," said Liu Gu, an energy analyst with Shenzhen-based Guotai Jun'an Securities Ltd.

The nation's largest oil refiner Sinopec, which imports 70 percent of its crude oil, will see a loss in its second-quarter refining business due to high crude oil price, she said.

The refining business of New York and Hong Kong-listed Sinopec recorded a profit of 4.17 billion yuan in the first quarter due to lower crude oil prices. In 2006 its refining loss widened to 25.3 billion yuan from 3.54 billion yuan a year earlier.

China's crude oil imports have outpaced its domestic production in recent years to satisfy increasing demands for energy. From January to June, China imported 81.54 million tons of crude oil, up 11.2 percent year-on-year. Analysts forecast full-year imports to climb 10 percent from 145.2 million tons in 2006.

PetroChina, the listed company of CNPC, will import 40 percent of the crude oil it needs for refining this year, up from 30 percent in 2006, a company official said earlier.

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