The National Development and Reform Commission announced that
China would raise the prices of gasoline, diesel oil, and aviation
kerosene by 500 yuan per ton, almost a 10 percent rise, starting
from November 1 in an attempt to solve the recent "oil crisis."
Shanghai Securities News learned that private
refineries, refineries of China National Petroleum Corporation
(CNPC), and China Petroleum and Chemical Corporation (Sinopec) will
profit from production, even though the profit level is left far
behind the average international level.
A boss from a Shanxi chemical plant told Shanghai Securities
News that after oil prices were raised, as long as the
international crude price prices did not exceed US$91 per barrel,
his company could profit; this is known as the profit price. If
prices hover between US$91 and $103 per barrel, the company would
suffer losses from continued production but these would still be
less than the losses if they stopped production; this price is
widely known as the critical price.
The data shows that the average price of the West Texas
Intermediate (WTI) crude oil futures in October was US$83.849 per
barrel by October 29, lower than the profit price of the
company.
Some accused private refineries of bearing the major
responsibility for this oil crisis in China. An executive of
Sinopec once remarked, "Although Sinopec's refineries still insist
upon organizing fully loaded production, local oil refineries and
fuel oil refineries don't have the same obligation, therefore the
total oil products available in the market are reduced."
After the price adjustment, the profit price and critical price
from Sinopec reached US$85 and US$97 per barrel, which are slightly
higher than the prices for PetroChina. Sinopec said it would refine
800,000 tons more crude oil this month, registering the company's
highest year-on-year growth. The oil giant also plans to import
diesel oil this month as a precautionary measure for possible
market upheaval caused by the rising prices.
For more details, please read the full story in Chinese. (
http://www.cnstock.com/paper_new/html/2007-11/02/content_59600900.htm)
(China.org.cn November 2, 2007)
