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China’s biggest refiner, Sinopec, reported a 54-percent in net profits for the second quarter of the year thanks to the oil price rally that pushed Brent to US$80 in May. Reuters quotes a company statement as saying the result had beaten the company’s own profit estimate of a 50-percent improvement in the net profit.
For the first half of the year, Sinopec posted the highest six-month net profit since at least 2000, Bloomberg reports, and that’s despite a slight 1.6 percent dip in oil production and a 2.1-percent decline in refined product sales.
But Sinopec, along with the other state refiners, also benefited from tax regime changes that put the independent refiners—the so-called teapots—at a disadvantage, that coupled with the higher oil prices, hurt their competitiveness. As a result, Sinopec exported record volumes of diesel and gasoline, which in turn contributed to the rosy financial result. Sinopec said it will increase its dividend payout by 60 percent thanks to the strong figures.
Sinopec is the world’s largest oil refiner in terms of capacity and was among the most active lobbyists in favor of Beijing keeping U.S. oil imports out of the tariff war. The lobbying was successful: Beijing has slapped tariffs on U.S. fuel imports and coal, and will add LNG to the mix if Washington goes through with the next round of tariffs, but crude oil may stay out of it.
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Sinopec had earlier this year suspended crude oil imports from the United States amid the trade spat between Washington and Beijing in anticipation of crude oil making it onto the tariff list. When this did not happen, Unipec started buying U.S. crude again despite the trade dispute escalation that saw China slap 25-percent tariffs on U.S. oil products and coal.
U.S. oil shipments to China account for 3 percent of the country’s total imports of the commodity. China, on the other hand, accounted for a fifth of U.S. crude exports in May, according to EIA export data.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.