The strong May 12 earthquake in Sichuan will exert impact on China's oil supply, but the impact is not big, said an official of the State-Owned Assets Supervision and Administration Commission (SASAC).

     Liu Nanchang, deputy director of the Performance Examination Bureau of SASAC, said the China Petrochemical Corporation and China National Petroleum Corporation are the two major gasoline suppliers in China.

     According to Liu, the earthquake disaster has brought about damages to the 204 gas stations and 48 oil depots of the above two corporation in the quake-hit areas, as well as the Southwest Oil and Gas Co and the Changqing Oilfield of China National Petroleum Corporation. The Nanchong Refinery Plant was forced to suspend production for a time being.

     For large enterprises like PetroChina and SinoPec, the losses in the earthquake shall have not very big impact on them, said Liu.

     Liu said that the earthquake is the main cause for the fuel price hikes. Before the price hike Before the price increases, Chinese refiners suffered a loss of more than 4,000 yuan for each ton of production, while each ton of imported gasoline and diesel led to losses of about 3,000 yuan and 5,000 yuan respectively.

     China National Petroleum Corporation, the country's largest oil producer, saw its large amount of profits devoured, while China Petrochemical Corporation, the country's major refiner, began to report losses.

     China National Development and Reform Commission (NDRC) experts said that the recent move to raise fuel and electricity prices was intended to adjust market supply and demand and better allocate resources with the leverage of prices.

     The move was in line with the country's goal to bring the market more into play in forming prices under macro controls, said the unidentified NDRC experts.

     They said the increase was adopted to ensure market supplies. The production halt and suspension at local refiners had made it very difficult for the two state-owned oil companies to meet the entire market demand.

     Local refiners in China produce about 20 percent of the country's total oil products output, but they suffered huge losses due to the gap between the frozen domestic prices and rising international prices. Some halted production to shun further losses.

     The relatively low prices should also be blamed for the fast-rising demands, some even from neighbouring countries and regions, they said.

     The country's power companies were also squeezed by rising power coal prices. The coal price has kept on rising to more than 500 yuan per ton  and even 1,000 yuan a ton in some places. The price rises of coal indicates increase of costs and losses for power plants.

     Liu said, the country's five major state-owned power enterprises reported across-the-board losses in the first half of this year.