PetroChina chief says fuel prices should be raised

BEIJING Tue Mar 13, 2012 11:59pm EDT

BEIJING (Reuters) - China should raise gasoline and diesel prices to reflect the recent surge in crude oil prices, a top executive with China's leading oil and gas firm said on Wednesday, the latest industry official to ask for an increase.

Any price increase would be the second so far this year and would raise China's fuel prices to fresh highs, raising concerns about inflation just as the economy slows down.

"My feeling is that prices should be adjusted: 22 working days have passed and crude prices have gained more than 10 percent," Jiang Jiemin, chairman of both China National Petroleum Corp (CNPC) and PetroChina (0857.HK)(601857.SS), told reporters on the sidelines of China's parliament meeting.

According to China's fuel pricing formula, the government may consider lifting fuel prices if a moving average price for a basket of crudes rises over 4 percent in a month.

But Beijing, worried about inflation, often postpones raising prices, meaning refiners often run at a loss as they are unable to pass on any increases in their crude oil costs to consumers.

China last raised gasoline and diesel prices by 3-4 percent on Feb 8. Crude oil prices have gained about 9 percent in the following month, but the government has held off announcing any changes during the parliament meeting, which ends on Wednesday.

Some analysts said the government could raise gasoline and diesel prices by at least 400-500 yuan a tonne, or about 5 percent.

Chinese oil firms make a profit on oil and gas production, fuel sales and chemical businesses but their refineries bear the brunt of losses caused by government price controls.

(Writing by Jim Bai; editing by Miral Fahmy)