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China to adopt new pricing system for oil products

China has proposed a new state pricing scheme, dubbed the “crude price plus cost” method, for oil products. Han Yongwen, secretary-general of the State Development and Reform Commission, said the commission, the nation’s top economic planning agency, is considering the trial operation of the new system which would help put an end to heavy losses in the oil processing and petrochemical industries. Industry observers believe the new system means domestic oil prices will become more closely linked to those on international markets, and consumers will have to bear bigger-margin price rises on imported oil. Han said the “crude price plus cost” method was based on the Brent, Dubai and Minas crude oil prices, taking into account processing costs and possible opportunities for enterprises to profit. (January 30, 2007)