Sinopec Q4 net profit falls 30%
HONG KONG/BEIJING CHINA Petroleum and Chemical Corp (Sinopec Corp), the country’s second largest integrated oil company, posted a 30 percent fall in fourth-quarter net profit on Sunday, missing forecasts, as big losses at its refining arm offset upstream gains.
Sinopec, Asia’s largest refiner, saw heavy refining losses last year as increases in domestic prices for oil products failed to keep pace with strong rises in international crude prices.
“We estimate that in 2012 the price of international crude oil will generally fluctuate in a high range due to tight geopolitical situation and other factors,” the company said its annual report.
Sinopec’s profitability may have improved slightly after the Chinese government hiked domestic gasoline and diesel retail ceiling prices by 6-7 percent from March 20, and raised the threshold of windfall tax on crude oil production from $40 per barrel to $55 per barrel.
However, its earnings would still largely hinge on international crude prices, which are being pushed up by ongoing tensions between Iran and the West over its disputed nuclear programme, analysts say.
China’s fuel price hikes often come smaller and later than required under its pricing formula due to inflation concerns, leaving refiners saddled with mounting losses.
Chinese oil firms make a profit on oil and gas production, fuel sales and chemical businesses but their refineries bear the brunt of losses caused by government price controls.
Sinopec’s refining losses amounted to 37.6 billion yuan in 2011 versus an operating profit of 14.9 billion yuan in 2010.