Sinopec acquired Russia's OAO Udmurtneft drilling venture by cooperating with Roseneft, Russia's state-owned oil company in 2006. The year also saw the company purchase interests in three offshore oil fields in Angola.

China has opened crude and refined oil wholesale activities to foreign capital in 2007 in line with its commitment to the World Trade Organization.

The import quota for non-state trading of crude oil and oil products will be 15 percent higher than last year's quota, said Chen Tonghai. Meanwhile, import tariffs for some petrochemical products will decline as the government seeks to increase the cost of resources by adding in environmental and resource rarity costs.

Chen predicted more fierce competition in the refined oil market.

The government gave China Petroleum and Chemical Corporation (Sinopec), a listed subsidiary of Sinopec Corp., a one-off compensation of five billion yuan (641 million US dollars) in 2006 to compensate for losses caused by the gap between the domestic refined oil price -- kept low by the government -- and its overseas equivalent which was pushed up by the soaring international crude oil price.

The compensation will be included in the company's total profits for 2006, Sinopec said in its announcement last week.

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