Asia’s biggest refiner, China Petroleum and Chemical Corp, also known as Sinopec, posted a 24 per cent increase in first- half net income after its refining business returned to profit. Net income rose to 30.3 billion yuan ($4.95 billion), or 0.25 yuan a share, from 24.5 billion yuan, or 0.21 yuan, a year earlier.
China's government shortened the window for retail fuel- price adjustments to 10 days from 22 days in March, allowing gasoline and diesel rates to more closely track Sinopec's crude costs. The company processed almost double what PetroChina refined as better technology and modern refineries helped it make a 200 million yuan profit from the business, compared with a 18.5 billion yuan loss a year earlier.
“Sinopec’s sophisticated refining technologies and good cost control allowed it to stay afloat,” Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai, said. “It will have a very good third quarter and second half as long as the government sticks to its promise of allowing domestic fuel prices to track international crude prices closely.”
PetroChina’s refining loss narrowed to 7.8 billion yuan from 23.3 billion yuan a year earlier. Asia’s largest company by market capitalisation processed 67.5 million metric tons of oil, compared with Sinopec’s 115.4 million tons.
Sinopec shares rose 1.2 per cent to HK$5.79 in Hong Kong this morning. The stock has risen 1.6 per cent in the past year, compared with a 11 per cent gain at the city's benchmark Hang Seng index.
Sinopec has honed its refining business to increase efficiency and reduce costs, while PetroChina, which is more focused on oil and gas production, hasn’t given the business enough attention, UOB’s Shi said. China’s price regulator cut retail fuel prices by about 800 yuan a ton between March and June. The last raise of about 100 yuan a ton in June may have been delayed on government concern higher energy prices will curb growth, Shi said.
Sinopec and PetroChina reported weaker demand for diesel, closely associated with industrial production, as China faces the slowest growth since the global financial crisis in 2008. China's growth slowed to 7.5 per cent in the second quarter, down from 7.7 per cent in the first quarter of this year and 7.9 per cent in the fourth quarter of 2012. The refiner is the last among China's three biggest oil companies to report half-year results. PetroChina posted a 5.6 per cent increase in first-half profit on August 22nd, and Cnooc Ltd., China's biggest offshore oil and gas explorer, posted a 7.9 per cent gain in profit on August 20th.
Bloomberg
