Soaring crude-oil costs may eat into Chinese Petroleum Corp's (CPC,
"We will keep monitoring the movement of international crude oil prices and endure [the increased costs] as much as possible, until they can no longer be borne," CPC president Chen Bao-lang (陳寶郎) said yesterday in a phone interview.
Chen earlier vowed not to raise retail gasoline prices within one month of his inauguration as the state-run oil refiner's new president on July 29.
Skyrocketing crude oil prices have hurt the refiner by adding NT$2 billion in the last month alone for the purchase of 18 million barrels of crude oil. That extra expense will be reflected in the company's financial report for this month, Chen said.
Chen said that the company considered upward adjustment in retail prices as the cost of oil was soaring. However, since the state-run company is also charged with stabilizing commodity prices, it had to use profits made from refined oil exports and overseas exploration to pay for the increased costs.
For the first seven months of this year, CPC posted a record cumulative pre-tax profit of NT$14.93 billion -- 120.4 percent of its fiscal-year target of NT$12.4 billion.
"We are cautiously optimistic about reaching our targeted profits for this year," Chen said, "and this means that we cannot afford to lose money in the rest of months ahead."
The planned stoppage of the company's four to five refining factories nationwide for maintenance in the second half of this year may lower its exports of refined oil products and petrochemical products, undercutting its export revenues, he said.
Dilemma
The industry veteran conceded that CPC now faces the dilemma of either a controversial hike of retail oil prices amid declining international crude oil prices, or continuing to bear the increased purchasing costs.
Prices of light sweet crude oil futures hit a price of US$49.40 a barrel on Aug. 20 on the New York Mercantile Exchange, its highest ever since the oil futures contract began in 1983.
Prices of the crude oil for delivery in October are on the decline now, having closed at US$43.99 per barrel on Friday.
"The reasonable price for West Texas Intermediate crude oil should fall between US$27 and US$35 a barrel in the future," the Ministry of Economic Affairs' Bureau of Energy said in a report last week.
The assessment, which was made following a symposium last week in Taipei, indicated that the global oil supply remains stable. The world's aggregate daily oil supply of 82.41 million barrels is more than enough to fulfill the world's daily demands of 81.99 million barrels, it added. The symposium was attended by several academics and representatives from major oil companies.
Higher oil prices have a limited impact on Taiwan's economy, according to the assessment. The four hikes in retail gasoline prices lifted the nation's commodity prices by 0.61 percent and slowed down economic growth by 0.27 percent, it said.
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