HONG KONG (Reuters) - Top Asian oil refiner Sinopec Corp posted a sharper-than-expected two-thirds fall in quarterly earnings after high oil prices squeezed its refining business into the red, and it faces a tougher 2008.

Global crude oil prices jumped to $96 at the end of 2007 from $80 a barrel at September's end, before striking an all-time high above $110 in March. High prices tend to favour crude oil producers while hurting refiners such as Sinopec.
China's refiners are all deeply loss-making because of widening gaps between soaring global oil prices and low state-set domestic fuel prices, which Beijing is reluctant to adjust due to concerns about inflation and social unrest.
The firm, which vies with producers PetroChina and CNOOC Ltd. to fuel the world's largest oil market after the United States, posted a 13.67 billion yuan ($1.95 billion) loss at its refining division in 2007, much of that in the fourth quarter.
Sinopec said in March it won a 12.3 billion yuan government bailout to compensate for refining losses, of which 4.9 billion yuan was intended to cover losses in 2007 and 7.4 billion yuan covered the first quarter of this year.
Yet analysts say that's hardly enough to offset losses. Vice Chairman Zhou Yuan said in March the firm was losing 2,000 yuan for every tonne of gasoline it produced, and even more for diesel.
Sinopec posted an October-December net profit of 6.71 billion yuan, versus a slightly revised 18.82 billion yuan a year earlier, according to Reuters calculations off 2007 earnings. The result lagged a consensus forecast of 12.75 billion yuan from 20 analysts polled by Reuters Estimates.
""A significant amount of the company's demand for crude oil is satisfied from external purchases. In recent years, international crude oil prices continued to be volatile,"" the firm said in a statement.
""Although the company has taken flexible countermeasures, it may not be fully shielded from risks associated with any wild fluctuation of international crude oil prices and disruption of supply of crude oil.""
Its 2007 net profit was up 5.5 percent to 56.53 billion yuan. The company said in its statement on Sunday that it aims to process 174 million tonnes of crude oil this year, versus 155.6 million tonnes in 2007. And it plans to set aside 121.8 billion yuan capital expenditure in 2008, it added.
To help reduce its debt and shore up working capital, Sinopec added on Sunday that it intends to go to shareholders for approval to sell up to 20 billion yuan in domestic bonds.
Shares in Sinopec rose 21 percent in the fourth quarter of 2007, beating PetroChina's 5.7 percent fall and a 5.2 percent drop in the index of Hong Kong-listed Chinese firms.