Money-losing Jilin Chemical Industrial plans to buy gas and crude oil from neighbouring Russia to reduce costs and boost production. The company, a major state-owned basic chemicals maker, is in talks with Russia to buy 20 billion cubic metres of natural gas and 20 million tonnes of crude oil a year, Jilin Governor Hong Hu said. 'This can help [the company] save on raw materials costs,' Mr Hong said at a trade fair for Jilin province in Hong Kong. Jilin Chemical, a subsidiary of oil giant PetroChina, is likely to post its third annual consecutive loss which - under mainland listing rules - would result in its Shenzhen-listed A shares being delisted. The company posted an unaudited net loss of 659.01 million yuan (about HK$617.55 million) for the first nine months of this year, under mainland accounting standards. That followed a net loss of 1.81 billion yuan last year under international accounting standards - a record for an H-share company at the time. The loss was due mainly to huge provisions against obsolete inventory and outstanding receivables. In 2000, the company's net loss was 835.99 million yuan, largely because of a write-off of old equipment and staff redundancy costs. Mr Hong said Jilin Chemical was likely to sustain a loss this year but would achieve a turnaround next year. 'The company has been in the red because its product mix did not fit the market . . . the company is readjusting now,' Mr Hong said. The plan to buy raw materials from Russia forms part of the company's strategy to stem losses. Russian gas and oil would be piped directly to the company's plants, Mr Hong said. The provincial governor also said Jilin Chemical was planning to increase its annual ethylene production to one million tonnes from 450,000 tonnes. Jilin province, whose economy is dominated by heavy industry, faces high unemployment caused by the reform of its loss-making state-owned enterprises. The central government is reported to have promised two billion yuan to fund reforms and soften the impact of unemployment. Separately, Jilin plans to strengthen its vehicle industry, another of the province's pillar industries. The mainland's largest vehicle maker, First Automotive Works, which is based in Jilin, hopes to increase annual sales to one million units by 2004 from 550,000 units expected this year. First Automotive was expected to achieve sales of 80 billion yuan this year, Mr Hong said. The company was expanding its capacity so as to maintain its dominance in the domestic market, he said.