Zhu Jianjun, director of the system reform section under the China National Petroleum Corporation's development research department, revealed that based on three major changes facing the oil industry, related departments are working over to raise petroleum resource tax and planning to levy excess profit tax.

It is learned that the changes in global oil supply-demand situation are mainly reflected in Asian and Pacific regions' consumption growth. It is predicted that the Asian and Pacific regions will overtake North America in oil consumption and become the largest oil consumer in the world this year. At present, Asia's dependency on oil import has exceeded 70%.

China's dependency on oil import will also increase consequently. Zhu estimated that by 2020, China's oil consumption will reach 450 to 500 megatons while domestic output will amount to 200 megatons, which means that China's oil import dependency will go up to 60% and its oil supply will shift from domestic market-oriented to overseas market-oriented. In terms of international oil price, Zhu believes that the average oil price will range from 55 to 60 US dollars per barrel in 2006 and it is unlikely to drop to below 40 US dollars per barrel in the coming two or three years.

Zhu added that China's related departments are studying on the adjustment of oil industry-related polices. "China's oil resource tax consists of several tiers and the level is obviously lower than that of foreign countries. Hence China needs to adjust related policies and the base of oil resource tax will be raised by a large margin." said Zhu. He also revealed that China would impose excess profit tax on the oil industry. Profits of upstream oil production when the price is over 40 US dollars will be collected by the government for a second distribution to subsidize industries and institutions affected by oil price hike, such as transportation and oil refining.
 
Editor: Yan