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Sinopec announces boost in exploration and production profits in first-quarter results despite overall slump

28th April 2014

Chinese oil and gas giant, Sinopec, has released its first quarter results today that show offshore, shale gas, and overseas production as growth catalysts despite overall drop in profits

Sinopec announces boost in exploration and production profits in first-quarter results
Sinopec maintained safe and stable operation at its refining units, adjusted utilisation according to changing demands, optimised product slate and increased production of gasoline and jet fuel

Sinopec strengthened its oil and gas exploration and production activities, achieving steady increase in oil and gas output. In exploration, major progress was made in offshore natural gas plays in western Sichuan and in central Yuanba in northeastern Sichuan. While in production, construction of key crude oil development projects progressed smoothly.

Construction of shale gas production capacity in Fuling also achieved significant progress. As of March 31, 22 wells have been put into operation in the pilot project. Crude oil production for the first quarter was 89.37 million barrels, increasing 8.76 per cent over the same period last year; natural gas production was 177.37 billion cubic feet, up 8.68 per cent over the same period last year. However, due to the downward trend of international crude oil price and cost increase in upstream production in the first quarter, the exploration and production segment’s operating profit was USD 2.1bn, 18.63 per cent lower than the same period last year but nevertheless an increase of 64.07 per cent over the previous quarter.

Sinopec maintained safe and stable operation at its refining units, adjusted utilisation according to changing demands, optimised product slate and increased production of gasoline and jet fuel. In the first quarter it processed 57.22 million tonnes of crude oil, down 2.5 per cent over the same period last year; produced 11.97 million tonnes of gasoline, 5.46 per cent higher on a year on year basis; produced 4.86 million tonnes of kerosene, 15.99 per cent higher year on year. In the first quarter, the refining segment realized an operating profit of USD 600m, increasing 69.65 per cent over the same period last year and up 92.43 per cent over the previous quarter.

Faced with high and volatile feedstock prices, declining chemical product prices and other challenges, Sinopec improved the synergy between production and selling, and pushed forward the adjustment of feedstock mix and the utilization of capacity to optimize its operations; adjusted product grade and increased the proportion of high value-added chemical products.

Capital expenditure for exploration and production segment was USD 668m, mainly for the construction of oil and gas production capacity in Shengli oilfield, Tahe oilfield, Yuanba offshore gas field in southwest China, and Daniudi gas field in northern China, development of shale gas in Chongqing Fuling Jiaoshiba block and coal-bed methane in southern Yanchuan, LNG projects and natural gas pipeline construction in Shandong and Guangxi provinces, overseas projects as Angola block 18 and Russia UDM, etc.. Capital expenditure for refining segment was USD 338m, mainly for refinery revamping projects in Shijiazhuang, Yangzi and Jiujiang, and quality upgrading of refined oil products.

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