PetroChina, Sinopec to pay RMB5 bilion a year more for new resources tax in Xinjian

Beijing, May 27th, 2010 - PetroChina and Sinopec, China's largest natural gas producers, will have to pay 5 billion yuan more annually for the new resources tax levied in Xinjiang province, China's largest gas tank.

The tax rate, at 5 percent ad valorem or a levy of 5 percent of the resources price, would force PetroChina and Sinopec to pay an extra of 3.6 billion yuan and 1.4 billion yuan respectively.

A research report from Goldman Sachs predicts that PetroChina and Sinopec's EPS during the 2010 to 2012 period would decrease by 4 percent and 1 to 2 percent respectively if the Xinjiang region imposes the new tax rate strictly. And if the new tax spreads to the whole country, PetroChina and Sinopec would have to see their 2012 EPS decline by 17 percent and 8 percent respectively.

Qiu Xiaofeng, an energy expert, estimates that if the new tax is extended to the whole country, PetroChina will have to pay an additional 20 billion yuan in tax annually. - Xinhua News Agency -