Gulf News reported that China Petroleum & Chemical Corporation posted its lowest half yearly profit since 2008 after the sale of fuels at state controlled prices reduced earnings.

Net income declined 41% to CNY 24.5 billion from CNY 41.17 billion per year earlier. The result beat a median estimate of seven analysts compiled by Bloomberg that called for a profit of CNY 22.9 billion.

Sinopec’s profit slide follows a drop in earnings for larger rival PetroChina Company which said it expects fuel pricing reforms in the second half to help cut losses from refining. Sinopec and parent China Petrochemical Corp. have announced more than USD 40 billion in deals to acquire assets globally since 2009 to build up oil and gas production and diversify from refining.

Mr Gordon Kwan Hong Kong based head of energy research at Mirae Asset Securities Limited said that “Sinopec somehow did a nice job in cost control because they can process less expensive low grade crude in many refineries. Further upside in the second half will hinge on the pace of China’s domestic fuel pricing reforms and improvement in its upstream asset quality. Until then, it is likely Sinopec shares will lag behind rivals PetroChina and Cnooc.”

Source - Reuters

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