China’s Sinopec posts record quarterly profit as refining margins jump

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The company logo of China’s Sinopec Corp is displayed at a news conference in Hong Kong, China March 26, 2018. REUTERS/Bobby Yip

Top Asian oil refiner Sinopec Corp 600028.SS0386.HK swung to a record quarterly profit in July-September, thanks to a jump in refining margins and earnings from the spin-off of pipeline assets, the company said.

The firm’s third-quarter net income nearly quadrupled from a year ago to 46.39 billion yuan ($6.92 billion), Sinopec said, after reporting losses in the first half of this year.

That’s the highest quarterly profit, according to Refinitiv Eikon data going back to 2003.

Sinopec’s refinery crude throughput rose nearly 2% year on year to 63.5 million tonnes (5.04 million barrels per day) as it started up a 200,000 barrel-per-day refinery in the southern Chinese city of Zhanjiang.

Refining margins jumped 68% from last year to $9.80 per barrel, while fuel sales at home were at 45.44 million tonnes, up 0.4% from the previous quarter.

Revenues from transferring the vast oil and gas pipeline assets to the country’s newly formed energy infrastructure giant PipeChina contributed 30.8 billion yuan to the third-quarter profit, Sinopec said.

The company also cut losses on liquefied natural gas imports by 4 billion yuan as it boosted spot purchases at low prices during the January-September period, a Sinopec executive said at an earnings call on Thursday. LNG-AS

Its LNG imports rose to 12.53 million tonnes, he said, without giving a comparison.

In the first nine months of 2020, net profit fell 45.7% year-on-year at 23.51 billion yuan under Chinese accounting standards. Its revenue slid 30.4% to 1.55 trillion yuan.

In oil and gas production, the firm lowered its operating cost to a record low average of $15.10 per barrel, down 8.4% from a year ago.

During the nine-month period, Sinopec produced 210.65 million barrels of crude, down 1% year on year. The natural gas output was at 772.14 billion cubic feet, down 0.2%.

($1 = 6.7029 Chinese yuan)