Alexa

State-run oil company expects heavy 2011 losses

State-run oil company expects heavy 2011 losses

Taipei, Dec. 31 (CNA) CPC Corp. Taiwan, the island's state-owned oil company, said Saturday it expects to post massive losses in 2011 because it has had to share the burden of high crude oil prices at the government's request to stabilize domestic consumer prices. The company estimated it would lose NT$8 billion (US$264 million) in December, pushing its total losses for all of 2011 above NT$40 billion. In the 11 months to November, CPC's losses reached NT$33.5 billion, according to the company. Due to escalating tensions in the Middle East after Iran threatened to blockade the Strait of Hormuz, crude oil prices have hovered at high levels in recent trading sessions, putting financial pressure on CPC, the company said. Despite the higher international crude prices, CPC has decided to leave prices at the pump unchanged next week for the second consecutive week, hoping to shield customers from the market turbulence. Unleaded 92-octane, 95-octane and 98-octane will sell for NT$30.6, NT$31.3, and NT$32.8 per liter respectively. Diesel will cost NT$28.8 per liter. The company decides gasoline prices based on a weekly floating price mechanism that takes into account market prices of different kinds of crude oil. CPC said it is now absorbing about NT$3.4 per liter of gasoline and NT$3.3 per liter of diesel to keep domestic fuel prices steady. Crude prices in futures contracts in New York rose about 8.2 percent in 2011 from 2010 with February settlements standing at US$99.05 (NT$3,001) per barrel, while London's crude futures were up some 13 percent from a year earlier with February delivery at US$106.86. CPC said international crude prices are expected to continue their upward trend next year after the U.S. recently released better-than-expected economic data that pointed to a stable U.S. economy. Citing reports from the International Energy Agency and advisory firms, CPC projected that crude prices would rise by US$3-US$5 per barrel in 2012, which it said would generate further losses for the company. (By Lin Shu-yuan and Frances Huang)