China Fuel Prices Linked to Brent, Dubai, Cinta Crude
Release Date: 2009-05-06
May 6 (Bloomberg) -- China’s gasoline and diesel ex-factory prices are linked to the prices of Brent, Dubai and Cinta crude oil after the government eased fuel-pricing controls last year, said the nation’s largest oil company.
Domestic fuel prices also take into account the cost of transportation, processing, taxes and a 5 percent refining profit, PetroChina Co. said in a statement on its web site today.
China, the world’s second-largest oil user, implemented in December a new fuel-pricing system that allows domestic refiners to pass on increases in crude-oil costs to consumers. The government had capped fuel prices below global levels to limit their impact on inflation.
“The new pricing system will in general ensure a profit for refiners when crude prices stay below $80,” Yin Xiaodong, an oil analyst at Citic Securities Co., said by telephone from Beijing today. “But the timing of any fuel-price adjustment will still take into account its social impact.”
The government’s cap on gasoline and diesel prices reduced the company’s operating profit by 90.99 billion yuan ($13 billion) last year, PetroChina said in the statement.
China Petroleum & Chemical Corp., the nation’s largest refiner, expects profit to rise more than 50 percent in the first half after the price controls were eased and crude-oil costs dropped. Its refining business swung to a profit of 7.3 billion yuan in the first quarter from a 25 billion-yuan loss a year earlier, the company also known as Sinopec said last month.
China will adjust fuel prices when crude-oil costs change more than 4 percent over 22 straight working days, Zhou Jiping, president of PetroChina, said in March. The government last increased oil-product prices by as much as 5 percent on March 25 to reflect higher crude-oil costs.
Crude oil for June delivery in New York was at $53.87 a barrel at 1:26 p.m. Singapore time. Oil is up 21 percent this year.
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