MOSCOW (MRC) -- Sinopec Corp, Asia’s top refiner, has posted a 35% fall in third-quarter net profit versus a year earlier, according to Reuters calculations based on a company filing, dragged down by narrowing refining margins and weaker global oil prices, reported Reuters.
The decline follows the launch of two privately owned mega-refineries and the expansion of other major refining plants, which added to the fuel surplus in China’s refined oil market, slashing profit margins for oil processors.
Sinopec reported 11.94 billion yuan (USD1.69 billion) net earnings for the July-September period, down just over a third from the same period last year.
In the first nine months of 2019, Sinopec’s net profit was down 27.8% year-on-year at 43.28 billion yuan under Chinese accounting standards, while revenue reached 2.23 trillion yuan, up 7.7%, the company said in its filing on Wednesday.
During the same nine-month period, Sinopec produced 212.78 million barrels of crude oil, down 1.6% from a year earlier, and 773.41 billion cubic feet of natural gas, up 8.4% on the year.
Sinopec, among China’s top three importers of natural gas, recorded a 5.5 billion yuan loss in the imports of 10 million tonnes of the fuel over the first three quarters, it told analysts in a briefing on Thursday, without giving a year-on-year comparison.
Despite a weaker global gas market, however, the company managed to lift sales prices to an average of $6.19 per thousand cubic feet during the period, up from USD5.91 a year earlier.
Capital spending in the company was 78 billion yuan over the first three quarters, mainly for shale gas exploration in southwestern China and oilfield expansion in the northwestern part of the country, as well as the construction of its Zhanjiang integrated refinery in Guangdong.
Company officials said on Thursday that capital spending so far accounted for 57% of the annual budget and the company expects to step up spending in the fourth quarter to meet its target for the year.
As MRC wrote earlier, in mid-September 2019, SIBUR Holding (SIBUR) and China Petroleum & Chemical Corporation (Sinopec) signed a framework cooperation agreement to produce SEBS (styrene, ethylene and butylene-based block copolymers). SEBS is a pelletised modifier for thermoplastics used to impart elasticity to plastic materials or as a primary polymer to produce elastic components. SEBS boasts excellent durability and is leveraged across a variety of industries such as plastics and bitumen modification, adhesives, modification compounds, and toys. Under the agreement, SIBUR and Sinopec will establish a 50/50 joint venture (JV) in Russia to produce at least 20 ktpa of SEBS.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.
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.