Sinopec profit doubles to highest in decade

China Petroleum and Chemical Corp, the country's largest oil refiner, said its net profit more than doubled to its best level in 10 years on higher crude prices and strong demand for petroleum products.

Net profit attributable to shareholders of the parent company stood at 72 billion yuan ($11.3 billion) in 2021, up 115.2 percent from the previous year. Its operating revenue reached 2.74 trillion yuan last year, up 30.2 percent year-on-year, the company said on Sunday.

Domestic crude oil output was 35.15 million metric tons last year, overseas crude oil production was 4.18 million tons, and natural gas output was 33.97 billion cubic meters, it said.

The company's total sales volume of refined oil was 221 million tons last year and total volume of chemical products reached 81.6 million tons. Annual ethylene output rose to 13.38 million tons, a year-on-year increase of 10.9 percent, it added.

Sinopec has been actively pushing forward oil and gas exploration and development in key basins last year with profit and construction scale continuing to expand, it said.

The company has made a series of new oil and gas discoveries including a shale oil discovery in Bohai Bay, the Northern Jiangsu Basin, and Sichuan Basin. The company has also been stepping up natural gas exploration and development while securing mid and long-term liquefied natural gas contracts to ensure sufficient gas supply in the country.

Natural gas sales volume and market share kept climbing last year, with production of natural gas rising 11.9 percent to 34 billion cubic meters, it said. An analyst said the record performance was backed up by higher prices and demand for petroleum products last year.

Ma Yongsheng, president of Sinopec, said there are still many uncertainties lingering on oil prices in the short future.

"There are so many lingering factors impacting oil prices, such as geopolitical, macroeconomic factors, policy implementation of OPEC+ and the strength of the greenback.

"With the above uncertainties, it's barely possible to give a precise prediction on future oil prices, but an approximate $100/barrel and $85/barrel, respectively, for this year and next year could be made considering the general trend," Ma said.

Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, said as the economy gradually recovers from COVID-10 worldwide, refining and petrochemical sectors have rebounded in response.

As the global economy continues to recover worldwide, boosted by widespread stimulus measures, demand for petrochemical products has been rising, he said.

Growing sales of automobiles and the gradual lifting of travel restrictions have helped drive demand for petroleum and petrochemical products. This led to a better and improved external operating environment for petrochemical companies at home and abroad, Luo said.

Energy consultancy ICIS said China's export-led economic recovery has continued to support growth in global petrochemical demand.

Capital expenditure for Sinopec stood at 167.9 billion yuan in 2021, with exploration and development accounting for 68.1 billion yuan. Capital expenditure is set at 198 billion yuan in 2022, up 18 percent from the 2021 level, it said.

Li Ziyue, an analyst with BloombergNEF, said Sinopec's plan to invest a record high amount of capital to raise oil and gas drilling this year is due to China's aim to enhance energy security and insulate itself from volatile global commodity markets.

The company is also expected to further accelerate gas exploration, especially shale gas, and secure long-term LNG contracts to bolster gas supply security, she said.

Much of the expenditure last year went to oil and natural gas capacity construction in the Shunbei oil and gas field in the Xinjiang Uygur autonomous region, Fuling shale gas field in Southwest China's Chongqing, Weirong and Western Sichuan natural gas projects.

Other major investments last year include the LNG terminal construction and the carbon capture, utilization and storage project in Shengli oilfield, it said.

The company has also been investing heavily in clean energy to diversify its business, including in hydrogen. It earlier said it would further invest in hydrogen while expanding other new energy businesses during the 14th Five-Year Plan (2021-25). It plans to invest 30 billion yuan during the 14th Five-Year Plan period in hydrogen-related businesses, including hydrogen refueling stations and hydrogen storage facility construction, it said.

It also plans to build 1,000 hydrogen refueling stations, 5,000 charging and battery swap stations and 7,000 distributed photovoltaic power generation facilities during the 14th Five-Year Plan.