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China’s Biggest Refiner Sees Profits Drop Amid Weak Fuel Demand

Sinopec, the biggest refiner in China and Asia, has suffered from the Covid lockdowns and weaker Chinese fuel demand this year as its January-September net profit dropped by 5.6% compared to the same period of last year.

Sinopec’s net profit declined to $7.8 billion (56.66 billion Chinese yuan) in the nine months to September, according to a stock exchange filing, as demand was slack while operating costs jumped with high energy prices and high crude oil prices.

Revenues, however, increased by 23% to $338 billion (2.45 trillion yuan) between January and September.

The fuel refining business suffered from the snap Covid lockdowns in China this year, which have weighed on fuel demand in the country and have had analysts concerned about the trend in oil demand in the world’s top crude oil importer.

Another major state-held Chinese corporation, PetroChina, however, saw its profit jump by 60% year-on-year to $16.66 billion from January to September. PetroChina is the second-largest refiner in China and the biggest oil and gas producer in Asia.

Despite pandemic lockdowns across the nation, PetroChina saw its domestic crude oil output rise by 2.7% and its domestic gas output rise by 5.1% from January to September. Numbers for refining, however, were lower than in the same period in 2021, with PetroChina crude oil refining down 1.8%, reflecting consumption stifled by the ongoing zero-Covid policy. 

While refiners in China suffered from tepid fuel demand, upstream businesses continued to book increased profits as oil and gas prices rose.

China National Offshore Oil Corporation (CNOOC), for example, reported on Thursday an 89.1% annual surge in its net profit for the third quarter, pushed up by higher oil and gas prices. Revenues surged by 53.7%, as the average realized prices for crude and liquids jumped by 36.1% year over year to $95.80 per barrel in the third quarter, and the average realized gas prices increased by 15.1%, CNOOC said.

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By Tsvetana Paraskova for Oilprice.com

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