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20

High World Crude Prices and Price Control in China Caused Losses

China's oil refiners reported losses totaling 30 billion yuan

China's oil refiners, squeezed by high international crude-oil prices and price controls at home, reported losses totaling 30 billion yuan ($3.7 billion) in 2005, the government said Tuesday.

The loss for 2005 contrasted with a 20.8 billion yuan ($2.6 billion) profit for 2004, the National Development and Reform Commission said in reports carried by state-run media.

The commission, China's main economic planning agency, warned that refinery capacity is stretched to the limit, with a supply shortfall of 17 million tons, and proposed raising prices.

Under heavy pressure from producers, the government is reportedly considering gradual reforms of price controls on refined oil products.

Refining capacity increased by only 4.5 percent to 328 million tons last year, the reports said. The refineries processed about 286 million tons of crude oil, up 6.6 percent from the year before.