Sinopec's H1 Profit Declines 22%

China Petroleum and Chemical Corporation (Sinopec) has reported a 21.6% drop in net profit for the six months that ended on June 30 as international oil and natural gas prices remained low.

For the first six months of 2016, company’s net profit was yuan 19.9bn ($2.98bn), down from yuan 25.4bn a year earlier. Sinopec’s total turnover was yuan 879.22bn, 15.6% down year-on-year, it said August 28. In the first half of 2016, the operating profit was yuan 35.1bn , down 13.3% on the previous year. Sinopec's results were only a tad better than those of two other Chinese state owned energy firms PetroChina and Cnooc who respectively reported a 98% decline in half-year profit; and its first H1 loss in more than a decade.

Production in the first half of 2016 was 218.99mn barrels of oil equivalent. Domestic crude production was 128.38mn barrels while overseas production was 25.79mn barrels, and total gas production was 388.69bn ft³.

Sinopec fuel station (Credit: Sinopec)

Fuling shale gas field development

Sinopec said it will press ahead with development of Fuling shale gas field in the second half of the year as well as speed up key capacity building projects, optimise production and sales, and intensify reservoir assessment in west Sichuan and northeast China.

In the second half of 2016, it plans to produce 147mn barrels of crude oil, of which domestic production will account for 125mn barrels and overseas production will account for 22mn barrels. Natural gas production is expected to be 421.2bn ft³ during the period.

The company expects oversupply conditions in global oil market to continue in the second half of the year. “China’s economic growth is expected to be steady in the second half of 2016, which will drive the growth of domestic demand for refined oil products and petrochemical products. The consumption mix of oil products shall continue to change, and demand for chemical products shall be gradually going for more high-end products. Yet over-supply in the international oil market is likely to persist, and international oil prices will stay at a low level,” it said.

Shardul Sharma