China's three largest oil refiners reported a year-on-year profit increase for the first half, which was mainly due to the introduction of a new fuel pricing mechanism in March that allows them to set prices that are closer to international rates, analysts said Monday.
Sinopec Corp on Monday reported a first-half net profit of 29.4 billion yuan ($4.81 billion), up 24.1 percent year-on-year.
PetroChina said Thursday that its first-half net profit grew 5.6 percent year-on-year to 65.52 billion yuan, the highest profit among the three firms.
China National Offshore Oil Corporation reported on August 20 that its first-half net profit increased by 7.9 percent year-on-year to 34.4 billion yuan.
The firms said the fuel price reform implemented in March had helped, narrowing PetroChina's losses from its refining business and allowing Sinopec to move from making a loss with its refining business in the first half last year to a profit this year.
The National Development and Reform Commission
(NDRC) announced the new pricing scheme on March 27 this year, which shortened the oil price adjustment cycle to 10 working days from the previous 22 working days.
The oil producers used to blame delayed price adjustments for refining losses, and said the NDRC always curbed price increases for fear of inflationary pressure, Wang Jintao, an analyst at commodity information provider Zibo Zhongyu Information Technology Co, told the Global Times Monday.
After the adjustment, each price change can be as low as 70 yuan per ton, whereas it was usually 500-600 yuan per ton under the previous scheme, Wang said
The NDRC also announced on July 10 it would increase natural gas prices for non-residential use, which will further increase oil firms' profits in the second half, Ma Ji, an analyst at JYD Commodities Hub Co, told the Global Times.