A worker piles up barrels of oil displaying the China National Petroleum Corp logo. [Photo / China Daily]

SHANGHAI - China should raise the threshold for the government's windfall tax on sales of crude oil to at least $60 a barrel from the current $40, said an executive with the nation's largest oil company.

"I personally think the trigger point should be raised to at least $60 a barrel, and $80 would be most reasonable," Yu Baocai, a vice-president at China National Petroleum Corp (CNPC), said in Beijing on Monday. Chinese oil producers pay a tax on revenue from crude sold above $40 a barrel under a levy introduced in March 2006.

Crude for April delivery rose on Monday to as high as $106.39 a barrel in electronic trading on the New York Mercantile Exchange, the highest intra-day price since Sept 29, 2008.

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The State oil companies' biggest difficulty right now is price caps on oil products and natural gas, Yu said. The government should raise gas prices in line with social affordability, otherwise "we are making huge losses" from importing gas, Yu said, without elaborating. CNPC's oil refineries aren't making a profit under crude prices, President Jiang Jiemin said on March 5.

The company will be able to meet diesel demand this month and the fuel market is "stable" right now, Yu said. Its fuel sales this month will be similar to those in January, he said, without giving details. China was a net importer of diesel in January for a second month as demand rose from drought-hit farmlands and as the nation built inventories.

The effect of unrest in Libya is "limited," Yu said. The company has evacuated its 392 staff members from the North African nation, it said on Feb 28.

CNPC will select overseas acquisition targets that meet its operating strategy and will choose assets with "true value" to the company, Yu said, without elaborating. The company is looking at unconventional gas and oil-sand assets in North America, Jiang said on March 5.

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