China's state-owned oil refiners are increasingly fearful that Beijing has quietly ended its partial rebate on crude oil import taxes after a big hike in fuel prices last month, officials said on Wednesday.

Two days into the third quarter, company officials have seen no indication that Beijing will carry on refunding three-quarters of its 17 percent value-added tax on crude imports, as it has done since April as part of a series of measure meant to offset losses for selling below-cost fuel on the domestic market.

"Yes we've heard that the government is likely to scrap the subsidy, possibly from July," said a PetroChina crude oil trading manager. "It's quite a heavy burden for the government to carry on doing that."

Even after Beijing's surprise 17-18 percent fuel price hike on June 20, removing the rebate could deepen losses for refiners Sinopec Corp and PetroChina and threaten to cause fuel shortages in the world's second-largest oil user.

It might also temper demand for crude imports if refiners opt to reduce operations and import gasoline and diesel instead, as they did during the second quarter as they enjoyed a full VAT rebate on imported refined fuels.

It was not immediately clear whether the tax waiver on fuel imports, in place since December, would continue into July. PetroChina held off July diesel imports amid fears that the government could also scrap the waiver, a company trader said on Monday.

In May, China overtook Japan as the world's second-largest crude buyer with daily imports at 3.8 million barrels.

Officials at the Minisitry of Finance, which is responsible for the policies, were not immediately available for comment.

An executive with top Asian refiner, Sinopec Corp, told Reuters that the original crude tax incentive was intended to be temporary for the second quarter only, but added that Beijing should replace it with some other measure to ease losses.

"Even if it is removed, we believe that the government will subsidise Sinopec in another way," said the executive.

Sinopec received about 7.1 billion yuan ($1.04 billion) under the rebate in April, state media said. PetroChina, which is far less dependent on imported crude, also received a handout, although the amount of subsidy was not available, said industry officials.

Company sources told Reuters on Wednesday that both firms received a grant for May but not yet for June, without giving estimates for the handouts.

Without the tax rebate, equal to about $14 a barrel, China would need to raise its domestic fuel prices by another 20 percent for refiners to break even, analysts have estimated, a move few expect Beijing to undertake any time soon.

China still sells some of the cheapest fuel in Asia, but is loathe to stoke inflation or social unrest by raising prices quickly to keep pace with roaring global markets, preferring instead to provide various subsidies and tax breaks.

Should Beiijng remove the tax rebate, it still has one other tool on hand -- the proposed revision of a windfall tax on crude that will effectively shift some of the hefty revenues from crude production to the refining sector, said Niu Li, of the State Information Centre, a government think-tank.

And the bumper 34 percent increase in China's first-quarter tax revenue should mean Beijing has the financial power to carry on the doleouts, despite the extra spending that goes to relief works after a deadly May 12 earthquake, he said. ($1=6.856 Yuan)