Asia's top refiner Sinopec yesterday posted a net profit of 53.9
billion yuan for 2006, up 30.05 percent, as it kept costs down and
increased revenue across the board. Its sales exceeded 1 trillion
yuan for the first time.
Analysts said the firm's winning streak was likely to continue
this year and the next.
"Sinopec has done a good job of trimming operating costs and
enhancing revenue from upstream to downstream. The company
successfully achieved its mission in the first quarter last year
its decent financial results have not come out of the blue," Liu
Gu, a veteran energy analyst with Shenzhen-based Guotai Jun'an
Securities (Hong Kong) Ltd, told China Daily.
"In the downstream refining segment, Sinopec tried every means
it could to lower soaring sourcing costs by purchasing sour crude
and increasing sour refining capacity. Within the distribution and
retail sector, it spared no efforts to enlarge market share and
lower logistics and management costs," said Liu.
Sinopec has been building up pipelines in cities across China to
transport oil products from refineries to sales networks a
substantial cost-cutting move, Zhang Zhiguo, a senior media manager
with Sinopec, told China Daily.
Sinopec also benefited from robust market demand for
petrochemicals last year, and a high value-added petrochemical
product portfolio contributed to its overall business performance,
Liu said.
And there may be even brighter business prospects in store for
Sinopec this year and next, said Yin Xiaodong, an oil analyst at
CITIC Securities Co.
"That's because of the firm's overwhelming market share in the
retail sector. The maturing sales networks and logistics system are
important advantages for Sinopec," Yin said. Sinopec owns more than
28,000 filling stations across the country.
Moreover, the firm's Puguang and Cangxi gas fields in Sichuan
Province will bring stable profits in the long run, given the
country's consistent policy to raise the price of natural gas, Yin
said.
Robust demand for petrochemical products will also drive the
company's downstream business forward in 2007 and 2008, although
there may be an adjustment after 2009 due to redundant capacity
from Asian and Middle Eastern countries, Liu from Guotai Jun'an
said.
Sinopec's 2006 refining loss widened to 25.3 billion yuan from
3.54 billion yuan a year earlier. The firm, which imported 70
percent of its crude last year, received 5 billion yuan in
subsidies from the government in 2006.
Operating profit from oil and gas exploration and production
surged 27 percent to 76 billion yuan, the firm said.
(China Daily April 11, 2007)