MOSCOW (MRC) -- China Petroleum and Chemical Corp. (Sinopec) said its net profit fell 21.6% in the first half of 2016, hurt by a steep decline in international oil prices, reported Reuters.
The state-controlled energy firm, Asia's largest refiner, said in a separate statement that Dai Houliang had replaced Li Chunguang as company president and become vice chairman of the board. It said Chunguang had resigned due to his age.
During the first six months of the year, Sinopec posted a net profit of USD2.98 B, down from USD3.8 B a year earlier. Sinopec's peers PetroChina and CNOOC Ltd., both heavy on upstream oil and gas production, were hit badly by falls in crude oil and natural gas prices.
Sinopec's operating income in the first half was USD5.26 B, according to IFRS accounting standard, 13.3% lower than a year ago.
The refiner said its oil and gas output fell 6% in the first six months on-year, with crude oil production down 11.4%, as it was forced to cut output at loss-making fields.
While fuel demand growth in China, the world's second-largest consumer, moderated along with the broader economy, domestic competition heated up after more than a dozen independent refineries were allowed to import crude oil for the first time since late 2015.
As these independents boosted refinery throughput, state majors came under pressure to reduce operations.
Sinopec said its first-half refinery operations fell 2.51% on-year. The firm, however, boosted total domestic refined fuel sales by 3.1%.
"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 company said in a statement,
It added, however, that over-supply in the international oil market is likely to persist and international oil prices will remain low.
"The consumption mix of oil products shall continue to change, and demand for chemical products shall be gradually going for more high-end products," the company said.
As MRC said earlier, Russian petrochemical company Sibur is in talks with shareholder Sinopec about investing in a planned gas chemical plant in Russia's Far East, said Reuters in April 2016, citing Sibur boss Dmitry Konov. Sibur plans to buy gas from fields which Russia's Gazprom will develop in Eastern Siberia. In December, Sinopec paid USD1.338 billion for a 10% stake in Sibur and said it planned to acquire an additional 10% within three years.
Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally. Sinopec listed in Hong Kong, New York, London and Shanghai in August 2001. Sinopec Group, the parent company of Sinopec Corp., is ranked the 5th in Fortune Global 500 in 2012.