China oil refining giant bleeds after Covid saps fuel demand

[BEIJING] Sinopec posted its first-ever loss over a half-year as pandemic lockdowns and the oil price crash continue to weigh on oil giant earnings even as the country's economy recovers.

The net loss at Asia's biggest refiner was 21.7 billion yuan (S$4.29 billion) compared with a profit of 32.2 billion yuan a year ago, the company said in a statement Wednesday, citing international accounting standards.

The company has never posted a half-year loss since listing in Hong Kong in 2000.

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China Petroleum & Chemical Corp, as it's officially known, posted an operating loss of 31.69 billion yuan at its main refining business, compared with a profit of 19 billion yuan a year earlier, as measures to slow the spread of the coronavirus depressed demand for everything from from jet fuel to petrol, forcing it to process 10.5 per cent less crude than the year before.

Crashing crude prices cut into its drilling business, resulting in lower oil output and a loss of six billion yuan versus a profit of 6.24b yuan a year earlier.

Capital expenditure increased to 45 billion yuan in the first half, compared to 42.88 billion yuan the previous year.

Sinopec also lowered its full-year capex outlook by 10 per cent from the 143.4 billion yuan it projected earlier this year.

The company said it will adjust investment decisions dynamically according to market changes.

Sinopec announced a special dividend of 0.07 yuan per share after agreeing in July to sell equity stakes in its pipeline units to a new state entity for 47.1 billion yuan.

Total production decreased 0.4 per cent to 225.7 million barrels of oil equivalent, with overseas output down 8 per cent from the same period last year, while domestic production was unchanged. Looking forward, the company plans to boost refining output in the second half as the economy continues to recover from the pandemic. Sinopec forecast that it would process 130 million tons of crude in the second half, compared with 111 million in the first half.

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