China plans subsidies for oil companies to help ease fuel shortages

SHANGHAI, Dec 6, 2007 (AP) -- China will again offer subsidies to oil refiners to help offset the gap between high international crude oil prices and controlled domestic fuel prices, state media reported Wednesday.

The companies will receive rebates and will be exempt from paying oil import duties, the official Xinhua News Agency reported, citing the National Development and Reform Commission.

The report gave no dollar figure for the subsidies, intended to counter chronic fuel shortages.

Chinese oil refiners have balked at raising output due to mounting losses.

In 2005, the government paid billions of yuan (hundreds of millions of dollars/euros) to oil refiners to help compensate for rising losses. Surging prices and stronger sales helped offset losses in 2006, but this year's surge in crude oil prices to nearly US$100 a barrel has again squeezed their profit margins.