Beijing/Singapore — China Petroleum & Chemical Corp expects China’s refined fuel consumption to swing back to positive growth in the second half of this year and said it will accelerate its drilling for domestic natural gas.
Asia’s biggest oil refiner, known as Sinopec, reported its first interim loss on record late on Sunday as the coronavirus hobbled industrial activity and curbed travel, cutting fuel demand.
However, with China’s economic recovery taking hold, end-user demand for gasoline, diesel and kerosene should rise 1% in the second half from a year earlier, after a 13% fall in the first half, a company vice president said at a briefing.
Sinopec reported a net loss of 21.725 billion yuan ($3.17 billion) for the first six months of 2020 – the only half-year period it has ended in the red in Refinitiv Eikon data going back to 2003.
That compared with a 32.206 billion yuan profit a year earlier and implies a loss of 1.943 billion yuan in the April-June period, far smaller than the first-quarter loss of 19.782 billion yuan.
The company’s “operations and profitability have improved month by month from the second quarter” and its performance has stabilised, Sinopec said.
The company also wrote off an estimated 11.8 billion yuan in assets after re-evaluations.
First-half revenue fell 31% from a year ago to 1.03 trillion yuan, with refined product sales down 26.1% as the pandemic crippled energy consumption.
“The industry has experienced unprecedented difficulties,” Sinopec said.
Processed crude oil volumes fell 10.5% to 110.95 million tonnes，or 4.45 million barrels per day. The firm, which recently launched a new 200,000 bpd refinery in southern China, aims to raise throughput to 130 million tonnes (5.1 mln bpd) in the second half.
Upstream, Sinopec produced 140.27 million barrels (771,000 bpd) of crude oil, down 1% year-on-year, while natural gas production edged up 0.1% to 512.41 billion cubic feet. The firm is targeting output of 138 million barrels and 580.5 billion cubic feet in the second half.
China’s leading shale gas developer, Sinopec aims to nearly double its output of the unconventional fuel to 13 billion cubic metres in 2025, company president Ma Yongsheng said.
Capital expenditure came in at 44.99 billion yuan, less than a third of annual guidance of 143.4 billion yuan. Sinopec said it expects full-year spending at about 10% below that target.
(Reporting by Muyu Xu and Tom Daly; Editing by William Mallard and Richard Pullin)