Sinopec Denies Seeking Change to Oil Price System

2 August 2009 (Last Updated August 2nd, 2009 18:30)

China's leading state-controlled oil and gas company Sinopec Group has denied reports that it sought changes in the oil pricing mechanism, which allows for official oil price changes to be speculated on, according to Chinese reports. The Official China National Radio (CNR) reported tha

China's leading state-controlled oil and gas company Sinopec Group has denied reports that it sought changes in the oil pricing mechanism, which allows for official oil price changes to be speculated on, according to Chinese reports.

The Official China National Radio (CNR) reported that Sinopec was in discussions with peer oil firm CNPC and the top economic planner to fine-tune the new oil pricing mechanism, which was put in place in January, Reuters reported.

"The current oil pricing mechanism is too simple and transparent, which often leads to speculation and product hoarding. This is not good for a stable oil market order," CNR said.

However, Huang Wensheng, spokesman for Sinopec Group, the parent of Sinopec Corp, told the local Beijing Times that his company had never expressed such views, according to Reuters.

The National Development and Reform Commission (NDRC) announced in May that China would adjust fuel prices when global crude prices moved more than 4% from their average over 22 working days.

The NDRC also said that refiners would enjoy "normal" profits when crude was less than $80 a barrel, with tighter margins when it rose to more than that price.