The implementation of price-based resource tax on oil and gas in the whole country will not result in higher crude and oil product prices, according to a source with PetroChina, China's largest oil and gas producer.
State-owned oil giants PetroChina, Sinopec and CNOOC will have to bear more tax burdens, the source said. They cannot pass on the tax to consumers directly, as the domestic crude prices are mainly linked with Asia sweet crude prices and the existing oil product pricing mechanism is based on the changes of Brent, Dubai and Cinta crude prices, the source stated.
The Chinese government announced on Oct 10 that the country would expand its 5-10% resource tax on oil and gas to nationwide from the existing 12 experimental provinces since Nov 1.
Currently, the volume-based resource tax on crude from PetroChina's Daqing oilfield is Yuan 24/mt, which will surge to Yuan 300-600/mt if a price-based tax is levied.
Resource tax on CNOOC's offshore crude will swell from Yuan 8/mt to Yuan 250-500/mt, calculated by the major’s averagely actualized crude price of US$108.16/mt (equivalent to about Yuan 4,992/mt) in the first half of 2011.
China's price-based resource tax is currently on test implementation at 12 resource-rich provincial areas – Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Inner Mongolia and Guangxi – located in the northern and western parts of the country.
Crude output of the twelve areas amounted to 40.69-mil mt in the first eight months of 2011, accounting for 29.6% of China’s total, C1's data showed.
Other provinces still apply a volume-based resource tax of US$8-30/mt on crude and US$2-15 per 1,000 cu m on natural gas.
