By Wang Yu (China Daily)
Updated: 2007-07-19 08:55

Sinopec Corp outperformed bigger rival PetroChina in terms of annual crude output growth and increase in oil refining during the first half of 2007. But the top Asian refiner is likely to witness losses with its refining arm in the second quarter, analysts say.

"The growth pace of Sinopec's crude production surpasses a PetroChina's from January to June, proving the major refiner is paying more attention to upstream exploration and production. But because of soaring global oil prices since the second quarter of this year, Sinopec may suffer net losses again from its refining business," said Yin Xiaodong, an oil analyst at CITIC Securities Co.

Agreed Liu Gu, a senior energy analyst with Guotai Jun'an Securities. But because of its decent first-quarter refining profit, the result of Sinopec's refining business in the first half of this year may not be in the red, Liu said.

The company's refining business made a profit of 4.17 billion yuan in the first quarter, thanks to lower crude prices. Sinopec spokesman Huang Wensheng said the refiner's profit for the second-quarter would not be available until August 24.

There were media reports earlier this month citing anonymous sources from the National Development and Reform Commission saying Sinopec and PetroChina have applied to raise prices of oil products to reduce refining losses. Huang refused to comment on the reports.

Sinopec pumped 143.88 million barrels (20.26 million metric tons) of crude in the first half of this year, up 2.12 percent year-on-year. The company refined 6.38 percent more crude from January to June this year, reaching 76.25 million metric tons, the company said in a statement yesterday.

Year-on-year growth of Sinopec's crude output outperformed PetroChina's 0.1 percent rise in the first half, but gas production growth lagged behind PetroChina's 16.5 percent.

During the first half of the year, PetroChina processed 407 million barrels of crude, up 3.8 percent year-on-year.

Sinopec's refining arm returned to profit in the fourth quarter of 2006, but it is likely to swing back to the red this year as crude prices rose to a 10-month high of over US$70 a barrel at the end of June from a 19-month low of around $50 in January, Reuters reported.