Sinopec net profit up 14% in 2010; refining margins down

China Petroleum & Chemical Corp. (Sinopec), the world’s largest refiner by capacity, announced that the company’s 2010 net profit rose by 14% due to higher oil prices. Net profit for the 12 months ending December 31 was 71.8 billion yuan (US$10.9 billion). Revenue was up 42% due to high oil prices, which boosted numbers for its exploration and production segment. The company expects that as the world economy continues to recover, global average crude oil prices in 2011 will rise also. A company statement said, “The economic growth (in China) is expected to remain stable and relatively fast. Thus, the domestic demands for oil products, natural gas and chemical products are expected to increase steadily.” The high cost of crude oil, combined with China’s fuel pricing system has had a detrimental effect on the company’s refining margins which are down 42% in the first three months of 2011. Chief Financial Officer Wang Xinhua said, “Our refining segment comes under pressure when global prices are over US$100 a barrel.” These conditions are prompting the company to look to diversify the business. According to Sinopec President Wang Tianpu, the company is putting plans in place to become an international energy and chemical company by the end of 2015. To achieve that goal Wang Xinhua said that annual investment spending will increase to 150 billion yuan in the years 2012-2015. Sinopec expects to refine 222 million metric tons of crude oil in 2011, 147 million tons of which will be sold in China as refined products. (March 27, 2011)