Sinopec Posts 13 Percent Fall in Annual Profit on Weaker Oil Prices

Sinopec’s annual profits declined 13 percent, after oil prices fell and Chinese refiners posted a record year for processing and imports.

China’s largest fuel processor, officially known as China Petroleum & Chemical Corp., reported 58.3 billion yuan ($8 billion) net income for last year, it said in an exchange filing. That compared with 66.2 billion yuan in 2022. 

Global oil prices were 17 percent lower in 2023 than the previous year, which reduced the value of Sinopec’s drilling output but also lowered its crude costs. 

The results missed the average analyst estimate despite a rebound in its key refining margins, as upstream profits fell and its chemicals business continued to lose money. Chinese refiners ramped up fuel production last year to feed a populace eager to travel after Covid-19 restrictions were lifted. Still, the company had to grapple with a tepid economic recovery that created a glut of some chemicals like ethylene. 

The increase in refining activity also boosted China’s oil imports to a record. The nation’s refiners benefited in particular from cheap Russian crude shunned by many nations after the country’s invasion of Ukraine. 

Sinopec set its 2024 capital expenditure budget at 173 billion yuan, slightly below last year’s 176.8 billion yuan spending bill, mainly due to a scale-back in the chemical sector. 

It plans to maintain modest growth in both output and processing in 2024, with targeted oil and gas production is 1 percent higher than 2023 levels and refining throughput to increase 0.8 percent. Domestic refined oil product sales, which jumped 16 percent last year, are only expected to rise 1.6 percent this year.