China Petroleum & Chemical Corp (中國石油化工), the world’s biggest oil refiner, posted a 22 percent decline in profit for the first half of the year as oil’s collapse overpowered the boost from cheaper crude used to make fuels and chemicals.
Net income dropped to 19.9 billion yuan (US$3 billion), the Beijing-based company known as Sinopec said yesterday in a statement to the Shanghai Stock Exchange.
Revenue slumped nearly 16 percent to 879.2 billion yuan.
One of China’s so-called Big Three oil companies, Sinopec’s earnings compare with a 98 percent profit drop by rival PetroChina Co (中石油), the country’s biggest producer, and the first-ever half-year loss by CNOOC Ltd (中國海洋石油), its largest offshore explorer.
PRODUCTION
Crude production in the first half of the year dropped 11.4 percent to 154.2 million barrels, Sinopec said in the statement, while natural gas output rose 10 percent to 388.7 billion cubic feet.
Realized price for crude oil fell almost 26 percent to 1,596 yuan a tonne in the period, while that for natural gas slid 19 percent to 1,267 yuan per thousand cubic meters.
In the second half, Sinopec expects crude production at 147 million barrels and natural gas output at 421.2 billion cubic feet.
Sinopec will raise refining throughput to 120 million tonnes in the second half of the year, from 115.9 million in the first six months, the company said.
China’s oil refiners earlier this year got a boost from a government policy that halts retail fuel price adjustments when oil falls below US$40 a barrel, putting a floor under gasoline and diesel prices while crude continued to drop. The rule boosted margins during Sinopec’s first quarter, when net income tripled from a year ago to 6.66 billion yuan.
INDUSTRY HURTING
Profits from fuel making have started falling at integrated refiners from Exxon Mobil Corp to Royal Dutch Shell PLC as demand growth slows.
Global refining margins averaged US$13.80 a barrel in the second quarter, down from more than US$19 in the same period last year, according to BP PLC.
Asian oil refiners from Singapore to South Korea are cutting operating rates as they grapple with a slump in margins.
High costs and low prices have resulted in a decline in China’s domestic crude output, where aging fields are becoming too expensive to maintain. The country’s total crude output has slipped 5.1 percent in the first seven months of the year, while gas output has increased 3.1 percent.
Capital expenditure in the first half was 13.5 billion yuan, Sinopec said.
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