BEIJING, May 25 -- China Petroleum & Chemical Corp, Asia's biggest oil refiner, said the decision to raise fuel prices won't end a year of refining losses caused by higher crude oil costs.

    "It's not enough yet," Chairman Chen Tonghai said at a shareholders meeting in Beijing yesterday, after the government on Tuesday increased the price of gasoline by 10.6 percent, diesel by 12.3 percent and jet fuel by 10.3 percent. Shares in the company, known as Sinopec, fell as much as 2.6 percent.

    Retail gasoline prices in China have gained 18 percent this year, lagging behind the 40 percent advance in Singapore, Asia's biggest oil-trading center. Sinopec had a 7.88 billion yuan (US$982 million) operating loss from refining in the first quarter because of government price controls, designed to shield consumers and companies from rising energy costs.

    The increase "in no way restores refining to profitability," Thomas Hilboldt, head of Asia Pacific oil and gas at Citigroup Inc wrote in a report yesterday. "Even with the rise, prices will remain at loss-making levels."

    PetroChina had a refining and marketing loss of 19.8 billion yuan last year, compared with a profit of 11.9 billion yuan in 2004, the company said on March 20.

    In Asia's free markets, refiners' profit from turning crude oil into gasoline, diesel and other products rose to a nine-month high after plant shutdowns increased demand from countries such as Australia, Japan and Indonesia.

    The so-called complex refining margin in Singapore gained 20 percent to US$14.02 a barrel in the week ended on May 19, Merrill Lynch & Co said in a report sent to Bloomberg on Tuesday by e-mail.

    China's central government, which controls fuel prices to limit their impact on inflation, increased prices for gasoline, diesel and jet fuel by 500 yuan a metric ton starting yesterday, the National Development and Reform Commission said in a statement on its Website.

    "It's not going to completely ease our refining losses," Zhang Jingming, company secretary at Sinopec Shanghai Petrochemical Co, China's largest ethylene maker, said in a telephone interview yesterday. "An increase of about 1,000 yuan a ton would have eased the losses."

    Zhang said he expects to "eventually see domestic prices moving in line with international levels."

    (Source: Shanghai Daily)