China Oil Giants Post Heavy Refining Losses in 1st Half

PetroChina and Sinopec, the country's two largest oil companies, suffered a combined refining loss of 5.71 billion yuan (837.24 million U.S. dollars) in the first half of 2008 as soaring world crude prices added to their production costs.

The loss was 47.9 percent higher than the same period last year, Feng Shiliang, China Petroleum and Chemical Industry Association deputy secretary general, was quoted by Monday's Beijing Times as saying.

The country's oil companies have been losing money for each barrel of foreign oil they refined and sold to domestic consumers as they could not pass along the increase under the government-set refined oil prices, market analysts said.

World crude prices had surged more than 50 percent since November and now hovered around 130 U.S. dollars per barrel.

They would likely remain at high levels in the second half, between 140 U.S. dollar and 150 U.S. dollars per barrel, which meant another increase in domestic refined oil prices was possible, Feng said.

The government raised the benchmark gasoline and diesel oil retail prices to 6,980 yuan and 6,520 yuan per tonne in June, up more than 16 percent and 18 percent respectively.

The price increase was helpful but far from eliminating losses, said Sinopec. It said last week that its first-half net profit would decline by more than 50 percent because of the widening gap between the government-set prices of oil products and rocketing global crude prices.