Sinopec Q1 net profits surge, PetroChina down

BEIJING - China's largest oil refiner Sinopec saw net profits return to strong growth in the first quarter of 2013, while the country's top oil and gas producer PetroChina reported a decline in profits, company statements showed Thursday.

Analysts attributed the performances to a retail gasoline and diesel price hike and lower crude oil prices, which made the refinery business more profitable but weighed on prospecting and extracting operations.

Sinopec, or China Petroleum and Chemical Corporation, said in a statement its net profits surged 23.42 percent year on year to 15.83 billion yuan (2.54 billion US dollars) in the first quarter by the Chinese financial reporting standards, compared with an 11.4-percent year-on-year drop in 2012.

By the international reporting standards, Sinopec's net profits rose 24.4 percent year on year to 16.68 billion yuan.

PetroChina Company Limited said its net profits fell 8 percent year on year to 36.02 billion yuan in the first quarter by the international reporting standards, bringing the basic earnings per share to 0.2 yuan.

An increase in retail gasoline and diesel prices in February helped both companies' refinery businesses, said Qiu Xiaofeng, an analyst with China Galaxy Securities.

The Chinese government controls fuel prices in the domestic market as policymakers are concerned about their impact on inflation in the world's most populous nation.

Authorities raised retail prices of gasoline by 300 yuan per tonne and diesel by 290 yuan per tonne in February.

Sinopec came out of the red in its refinery business in the first quarter, reaping 2.2 billion yuan of profits.

PetroChina lost 1.56 billion yuan in refinery operations, but the losses were down by 8.84 billion yuan from the first quarter of last year.

Both companies were affected by decreased crude oil prices. PetroChina's profits in prospecting and extracting activities declined 5.6 percent year on year to 56.98 billion yuan, while Sinopec's profits in that sector tumbled 16.99 percent to 16.23 billion yuan.

PetroChina was also hit by a natural gas import price that is often higher than the domestic sales price.

Its profits in natural gas and pipeline businesses dipped 45 percent year on year to 1.1 billion yuan in the first quarter, with 14.45 billion yuan of losses recorded in gas and liquefied natural gas imports.

With prices of imported crude and gas swayed by global markets but domestic retail prices under government control, Chinese oil firms must further reduce operation costs and control the scale of their investment, said Qiu.

As part of its efforts to push market-oriented pricing for energy resources, the government announced last month it would shorten the retail fuel price adjustment cycle to 10 working days from 22 working days to better reflect changes in global oil markets.

In the first quarter, both PetroChina and Sinopec posted weak profits in marketing and chemical product businesses as a slowing economy sapped demand.

PetroChina saw profits in marketing plummet 65 percent year on year and recorded 3.18 billion yuan of losses in chemical business, according to the company's statement.

Sinopec's profits in marketing and distribution operations slipped 11.2 percent year on year and those in chemical products dived 87.47 percent.

The price of PetroChina's shares in Shanghai edged up 0.12 percent to 8.52 yuan on Thursday. Sinopec's shares climbed 0.59 percent to 6.78 yuan.