China Petroleum & Chemical Corp (Sinopec), Asia's largest crude oil refiner, unveiled a plan to increase this year's spending to enhance production capacity by 9.2 per cent, after posting an annual profit in line with expectation.
Sinopec has budgeted capital expenditure of 124 billion yuan (HK$147 billion) this year, up from 113.7 billion yuan in 2009. The increase was mostly for expansions in the refining, distribution and chemicals segments.
Planned oil output of 45.6 million tonnes for this year is 1.3 per cent less than last year's output, while targeted gas output of 14.1 billion cubic metres is 12.8 per cent higher than last year.
The company's net profit for 2010 was 71.8 billion yuan based on international accounting standards, up 13.7 per cent from 63.1 billion yuan in 2009. It was in line with the average estimate of 72.1 billion yuan of 27 analysts polled by Bloomberg.
The profit growth mostly came from upstream oil and gas production. Sinopec, the country's second-largest oil and gas producer after PetroChina, recorded an operating profit of 47.1 billion yuan from this division, almost double the 23.9 billion yuan seen in 2009.
This was driven predominantly by a 45.4 per cent jump in average oil selling price to 3,349 yuan a tonne, or roughly US$72 a barrel.
Oil output rose 0.1 per cent to 327.9 million barrels (equivalent to 46.2 million tonnes). Domestic output gained 0.3 per cent while that in Angola - contributing 8 per cent of total oil output - fell 3 per cent.
Natural gas output jumped 47.6 per cent to 441.4 billion cubic feet (equivalent to 12.5 billion cubic metres). Average gas selling price surged 23.8 per cent to 1.15 per cubic metre.
Operating profit from Sinopec's refining operation fell 42.4 per cent to 15.9 billion yuan, despite a 13.2 per cent rise in throughput to 211.1 million tonnes, as state refined fuel price control to tame inflation meant a squeeze in profit margin amid surging crude prices. Fuel distribution operating profit was steady at 30.8 billion yuan, although Sinopec sold 13.3 per cent more fuel last year.
Operating profit from chemicals gained only 8.9 per cent to 15.04 billion yuan, despite a 35 per cent jump in ethylene output.