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Sinopec's third-quarter profit drops a third on fuel glut, lower oil prices

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Sinopec's third-quarter profit drops a third on fuel glut, lower oil prices
FILE PHOTO: A man stands next to a logo of Sinopec, or China Petroleum and Chemical Corporation, at an expo on rubber technology in Shanghai, China September 19, 2018. REUTERS/Stringer/File Photo   -   Copyright  China Stringer Network(Reuters)
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BEIJING/SINGAPORE (Reuters) – Sinopec Corp, Asia’s top refiner, posted a 35% fall in third-quarter net profit versus a year earlier, according to Reuters calculations based on a company filing, dragged down by narrowing refining margins and weaker global oil prices.

The decline follows the launch of two privately owned mega-refineries and the expansion of other major refining plants, which added to the fuel surplus in China’s refined oil market, slashing profit margins for oil processors.

Sinopec <600028.SS><0386.HK> reported 11.94 billion yuan ($1.69 billion) net earnings for the July-September period, down just over a third from the same period last year.

In the first nine months of 2019, Sinopec’s net profit was down 27.8% year-on-year at 43.28 billion yuan under Chinese accounting standards, while revenue reached 2.23 trillion yuan, up 7.7%, the company said in its filing on Wednesday.

During the same nine-month period, Sinopec produced 212.78 million barrels of crude oil, down 1.6% from a year earlier, and 773.41 billion cubic feet of natural gas, up 8.4% on the year.

Sinopec, among China’s top three importers of natural gas, recorded a 5.5 billion yuan loss in the imports of 10 million tonnes of the fuel over the first three quarters, it told analysts in a briefing on Thursday, without giving a year-on-year comparison.

Despite a weaker global gas market, however, the company managed to lift sales prices to an average of $6.19 per thousand cubic feet during the period, up from $5.91 a year earlier.

Capital spending in the company was 78 billion yuan over the first three quarters, mainly for shale gas exploration in southwestern China and oilfield expansion in the northwestern part of the country, as well as the construction of its Zhanjiang integrated refinery in Guangdong.

Company officials said on Thursday that capital spending so far accounted for 57% of the annual budget and the company expects to step up spending in the fourth quarter to meet its target for the year.

($1 = 7.0555 yuan)

(Reporting by Muyu Xu and Dominique Patton in Beijing, and Chen Aizhu in Singapore; Editing by Louise Heavens and Tom Hogue)

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