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Sinopec Corporation: Two Billion Yuan Question∗ - page 2 / 5

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Chemicals Import & Export Corporation), and Zhuhai Zhenrong have been

granted licenses to import crude oil.

In 2001, China joined the World Trade Organization

. Under the terms of

accession, the Chinese Government agreed to raise its crude oil import quota by

15 per cent annually until eventual phase out in 2004.2 60.26 million tons of crude oil.

In 2002, China imported

Historically, the Chinese government regulated the domestic price of crude oil. In June 1998, the government relaxed its policy to allow buyers and sellers to negotiate prices. Until March 2001, the government published monthly benchmark prices for several crude oil grades to guide price negotiations between Sinopec and PetroChina. The two companies negotiated adjustments to the benchmarks according to transportation costs, oil quality, and prevailing market conditions.

In March 2001, the government ceased publication of the monthly crude oil benchmark prices. However, the two companies agreed to continue adhering to the benchmark price system. The prices of crude supplied by CNOOC and importers are set freely without government intervention. (Sinopec, Form 20-F, Financial Year 2001, p. 42).

The Table reports operating information for Sinopec’s exploration and production and refining segments over the period 1999-2002.

2 Peoples Daily, “China's Import Quotas for Oil to Rise 15 Percent”, Friday, August 02, 2002.

© December 2003, I.P.L. Png

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