The government's proposed fuel tax will not significantly affect domestic oil companies, but a market-based energy pricing system would relieve some of the pressure the companies face, said analysts.

"The proposed new tax on fuel will not greatly affect the business performance of China's two leading oil companies, PetroChina and Sinopec," said Liu Gu, an analyst with Guotai Jun'an Securities, adding their profit mainly comes from upstream business - oil and gas exploration.

Han Xiaoping, senior vice-president of Beijing Falcon Pioneer Technology Co Ltd agreed.