China Petroleum and Chemical Corporation (Sinopec) said on Tuesday the Chinese government will give it a one-off subsidy of five billion yuan (US$625 million) to compensate for losses in 2006 from low domestic refined oil prices.

Despite soaring international crude oil prices, China kept domestic refined oil prices much low, putting its oil refineries into red, said the spokesman with Sinopec's directorate.

Sinopec bears most of the losses caused by the rise of international oil prices because it takes 80 percent of China's imported crude oil and produces 70 percent of the country's refined oil.

"The ratio of liabilities to assets was near or exceeded 100 percent in 13 of Sinopec's 33 refineries," said the spokesman.

International crude oil prices have climbed 132 percent from US$28.4 per barrel in 2003 to the average of US$66 per barrel in the first nine months of 2006.

But gasoline prices rose only 72 percent and diesel oil prices 67 percent in China.

The government subsidy will be counted into Sinopec's profits in 2006 and the company will pay income tax.

(Xinhua News Agency December 27, 2006)