SHANGHAI: China Petroleum & Chemical Corporation (known as Sinopec) says
net profits in 2005 rose by 23 per cent on the year before, according to
domestic accounting standards.
However, there was a huge increase in costs, and money passed on to
shareholders was lower than that given out by other industry giants.
A newly discovered gasfield in Southwest China's Sichuan Province is not
expected to have a big impact on the firm's financial dealings in the
short-term, analysts said.
The firm, Asia's biggest oil refiner, said yesterday that net income last
year rose to 39.6 billion yuan (US$5.0 billion).
Analysts said 70 per cent of that came from oil and gas explorations. The
company's oil refining business is believed by experts to have incurred losses
due to surging international crude oil prices.
Sinopec processed 139.9 million tonnes of oil in 2005, an increase of 5.26
per cent on 2004. Close to 1 million tons were imported.
The company reported a massive surge in purchasing costs, up by 47.2 per
cent, because of rising prices of oil and other petrochemical raw materials.
Purchasing expenses accounted for 85.3 per cent of total operating expenses
which stood at 765.7 billion yuan (US$94.53 billion), a rise of 37.5 per cent
over the previous year.
Sinopec's profit distributable to shareholders based on international
accounting standards rose to 40.9 billion yuan (US$5.1 billion), up 13.6 per
cent. That was the lowest rise of China's three petrochemical giants, the other
two being PetroChina and China National Offshore Oil Corporation (CNOOC).
The increases in distributable profits at PetroChina and CNOOC were 28.4 per
cent and 56.9 per cent respectively, rising to 13.4 billion yuan (US$1.7
billion) and 25.3 billion yuan (US$3.2 billion).
Sinopec plans to pay a dividend of 0.09 yuan (US one cent) per share.
"PetroChina and CNOOC performed better because the two are less affected by
surging international prices of crude oil. PetroChina produces more oil than it
refines while CNOOC has no downstream operations in the petrochemical industry,"
said Shenyin Wanguo analyst Huang Meilong.
International oil prices surged and remained at high levels in 2005 for the
third consecutive year. In the second half of the year, in particular, oil
prices climbed to historical highs.
On August 30, 2005, WTI (West Texas Intermediate) crude oil prices on the New
York Merchantile Exchange exceeded US$70, setting the record price of US$70.85
China's domestic prices of processed oil have therefore been adjusted a
number of times, yet analysts say they are still way below international prices.
Commercial production is ready to start in the new field in Sichuan, with
annual output projected to reach 4 billion cubic metres by 2008 and 8 billion by
However, the gas field "will have little effect on the company's financial
performance in the short term," Shenyin Wanguo's Huang said.
In comparison, an ongoing offer by Sinopec to its four A-share subsidiaries
will help improve the company's financial position.
In February Sinopec announced its tender offer to acquire all tradable shares
of Sinopec Qilu Petrochemical Co Ltd, Sinopec Yangzi Petrochemical Co Ltd,
Sinopec Zhongyuan Oil & Gas High-tech Co Ltd and Sinopec Shengli Oilfield
Dynamic (Group) Co Ltd, and all non-tradable shares of Shengli held by investors
other than Sinopec.
The tender offer is expected to be completed on Thursday.
(China Daily 04/04/2006 page9)