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China expects 6% rise in oil imports


14-Nov-2005 - China Daily
China's oil imports may rise 6 percent this year despite high international prices that discourage refiners from buying overseas, according to a Chinese official.

China's oil imports surged 35 percent last year, to 122.7 million tons, partly because the government clamped down on the smuggling of oil products. The crackdown raised the need for locally refined oil products, which in turn increased the need for crude oil for processing.

China may import about 130 million metric tons of crude oil this year, the Chinese official, Xu Dingming, said at an economic conference here on Saturday. The oil import bill has exceeded $30 billion so far this year, said Xu, director of the energy bureau at the National Development and Reform Commission.

"We still need oil imports to sustain growth," Xu said. "In the environment of high international oil prices, our import bill is also soaring."

China led global growth in oil demand the past three years, helping to more than triple prices since November 2001. Oil touched $70.85 a barrel in New York Mercantile Exchange trading on Aug. 30 but has since slipped, closing on Friday at $57.53. China is trying to establish an energy-saving society to slow growth in demand for oil, Xu said.

The International Energy Agency has been trimming expectations for Chinese growth in oil demand this year as higher prices have curbed imports. Imports were up 4.8 percent in September after declining 6.1 percent in August.

The agency said on Oct. 11 that it expected China's demand to increase 3.2 percent, to 6.64 million barrels a day. That was revised downward from a 3.4 percent rise estimated on Sept. 9.

The cost of extracting oil domestically is $8 to $12 a barrel, and the government may consider taxing the profits earned on oil sold above $40 a barrel, Lou said on Saturday, citing a similar plan by some members of the U.S. Congress.

"We may consider implementing this special tax from next year," Lou said at the economic conference in Beijing. "The companies are enjoying record profits because of the oil they extracted from the country."

The tax may crimp profits at companies like PetroChina, the nation's biggest oil producer, which in the first half got most of its net income from production from Daqing, China's biggest oil field, and other sources. PetroChina reported record profit of 61.6 billion yuan, or $7.6 billion, in the first six months of the year, an increase of 36 percent from a year earlier.

Lou ruled out imposing a retail tax on fuels to curb waste. "We can't impose a retail fuel tax now because the pricing structure in China needs to be first refined and improved," he said.

Oil refiners prospered in the third quarter, when U.S. crude oil futures averaged $63.31 a barrel, up 44 percent from a year earlier. Net income for the top five publicly traded oil companies, ranked by worldwide sales, jumped 52 percent, to a combined $33.4 billion. Those five are Exxon Mobil, BP, Royal Dutch Shell, Chevron and Total.

14-Nov-2005 - China Daily

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