Sinopec given State subsidy of US$639m
By Wang Yu (China Daily)Updated: 2006-12-28 08:40 China Petroleum & Chemical Corporation (Sinopec) disclosed yesterday that it would get State subsidy of 5 billion yuan (US$639 million) to cover its losses from oil refining.
Asia's top refiner announced in a statement that "the one-off compensation"
from the government was to shore up its money-losing refining sector.
| |||
The country's oil exploration and production business reaped high profits as a result of soaring oil prices in the international market this year. But the refining segment suffered huge losses because the current pricing mechanism does not reflect price fluctuations on the world market.
About 70 per cent of Sinopec's crude oil for refineries comes from imports. It supplies oil products to the home market at government-fixed prices to fend off supply fluctuations and inflation.
"The compensation will help reduce our losses stemming from the refining business. It also indicates the current pricing mechanism is not fair for refiners," a senior official surnamed Wu with Sinopec told China Daily.
Strict controls over oil product prices have caused distortions in prices of refined and crude oil. "This has led to serious losses for many refinery enterprises", Sinopec said in a statement yesterday.
Sinopec's loss from processing almost doubled to 12.6 billion yuan (US$1.6
billion) in the third quarter from 6.6 billion yuan (US$844 million) a year
earlier, the company said in October.
| 1 | 2 |  |
(For more biz stories, please visit Industry Updates)