Sinopec, PetroChina plan output hike

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China's two main oil refiners plan to raise crude processing this year by 7.5 percent to meet rising demand, and a second fuel price hike this year is expected to be imposed by the government soon.

Sinopec Corp plans to process 228 million tons of crude this year, up 8 percent from 211 million tons in 2010, as it boosted refining capacity, Caijing magazine reported on its website yesterday citing an unidentified person.

PetroChina Co aims to raise crude throughput by 6.6 percent to 130 million tons this year from 122 million tons in 2010, Chief Financial Officer Zhou Mingchun said on Monday.

As China's economy may rise at a slower pace this year, both refiners' plans represented a slowdown in throughput growth - Sinopec processed 13 percent more and PetroChina refined 9.1 percent more in 2010.

Their plans could also be affected by domestic fuel prices which are set by the government under a cost pass-through mechanism. Zhou said PetroChina's refining break-even point is US$90 a barrel under current fuel rates.

The 22-day moving average price of Brent, Dubai and Cinta crude, on which China's fuel pricing is based, has gained more than 11 percent since February 20 when the government last raised gasoline and diesel prices by up to 4.5 percent, according to C1 Energy.

Analysts said the next fuel price increase is likely to occur around the Qingming Festival, which falls on April 5, when transport demand is set to rise.

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