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China’s Sinopec sees widening refining margins

08.22.2014  | 

Operating profit for the refining business rose almost 46 times to 9.7 billion yuan in the period from a year earlier, according to an English earnings statement to the Hong Kong stock exchange.

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By AIBING GUO
Bloomberg

China Petroleum & Chemical Corp. posted a better-than-expected 7.5% increase in first-half profit as refining margin at Asia’s biggest refiner widened and production climbed.

Net income was 32.5 billion yuan ($5.3 billion), or 0.28 yuan a share, in the six months ended June 30 from 30.3 billion yuan, or 0.25 yuan, a year earlier, the Beijing-based company, known as Sinopec, said Friday in a filing to the Shanghai stock exchange. The average of six analyst estimates, compiled by Bloomberg, was a profit of 30 billion yuan.

Sinopec is at the forefront of a China government push to restructure state-controlled companies and allow markets a bigger role in the allocation of resources. The company is seeking to raise 100 billion yuan selling about a third of its retail unit.

“China’s slower economic growth had a negative impact on Sinopec’s fuel-retailing business and it somehow managed to balance the loss by achieving higher margins in refining,” said Shi Yan, an analyst at UOB Kay Hian in Shanghai. “Profit should stay flat in the second half unless Sinopec can register major production increase in its shale gas unit.”

Operating profit for the refining business rose almost 46 times to 9.7 billion yuan in the period from a year earlier, according to an English earnings statement to the Hong Kong stock exchange.

Shale gas production reached 3.2 million cubic meters a day at Fuling, China’s biggest shale-producing project, in Southwest China’s Chongqing, it said.

Production Climbs

Oil and gas output rose 8% to 237 million bbl of oil equivalent, while total sales declined 4.2% to 1.36 trillion yuan. Capital expenditure was 39.2 billion yuan in the first half, with 20.7 billion yuan spent on exploration and production.

The average price for Brent, the benchmark for half of the world’s crude, rose to $108.82/bbl in the period from $107.88 a year ago.

The refiner is the first among China’s three biggest oil companies to report half-year results. PetroChina, the country’s biggest oil and gas producer, and Cnooc, China’s biggest offshore oil and gas explorer, will both report first-half earnings on Aug. 28.



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