Sinopec’s Profit Gains as Upstream Strength Offsets Refining

(Bloomberg) -- Sinopec, China’s top oil refiner, reported a marginal increase in first-half profit as a better performance from its upstream operations offset weakness in refining and petrochemicals.

Net income for the first six months was 1.7% higher than a year earlier at 35.7 billion yuan ($5 billion), according to an exchange filing on Sunday. Revenue for the first half was 1.58 trillion yuan. 

An expansion in Chinese refining capacity has coincided with faltering demand this year, resulting in a glut of oil products that’s weighed on margins. Greater uptake of electric vehicles and the increasing popularity of liquefied natural gas-powered trucks is also eroding consumption of gasoline and diesel. 

Sinopec said it would pay 0.146 yuan per share for the interim dividend. Morgan Stanley upgraded the company to equal weight earlier this month due to sustainable high yields and structural growth in gas.

The company produced 700.57 billion cubic feet of gas during the half, while crude output was at 140.53 million barrels, according to the filing.

The group spent 55.9 billion yuan on capital projects in the first half and expects to accelerate that to 117 billion yuan in the second half. It also plans to produce 679.5 billion cubic feet of gas in the second half, as well as 139 million barrels of crude. 

(Updates the sixth paragraph to add new details)

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