Monday, March 10, 2008

Sinopec ups sour crude use to counter rising costs

Sour and acidic crudes will account for one-third of Sinopec's refinery throughput this year, as the company looks for ways to minimize the impact of record oil prices on its bottom line, a senior executive said on Wednesday.

Asia's top refiner will process about 54 million tonnes of the cheaper but more technically challenging oil this year, Vice-President Cao Xianghong told reporters on the sidelines of China's annual parliament session.

"Sinopec will continue to increase capacity capable of processing sulphur crude, which accounts for an increasing percentage of world supply," he added.

Oil that is both acidic and high in sulphur could come in at more than $20 a barrel cheaper than more easily processed crudes.

This is a key difference for Chinese firms struggling to limit losses as global crude prices race to record levels, while Beijing is reluctant to raise state-set product prices because of concerns about inflation.

The government on Wednesday ruled out increases in gas, power and oil product prices in the near future, despite repeating a long-standing promise to reform the system used to set them.

Cao said Sinopec <><> hoped to further trim costs through improvements in technology, but even together with use of cheaper crude, it would not be enough to offset rises in feedstock prices.

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