Sinopec Group - the parent of listed China Petroleum & Chemical (Sinopec) - expects a 36 per cent profit decline to 12.8 billion yuan (about HK$11.99 billion) this year from 20 billion yuan last year. Chairman Li Yizhong blames the dip on huge compensation costs for staff reductions and a sharply lower international crude oil price, which has tumbled to about US$20 per barrel now from US$25 before the September 11 terrorist attacks in the United States. His profit estimate for China's No 2 oil and petrochemical company was quoted by the China Daily, which also reported the company had paid 7.4 billion yuan to compensate the 213,700 staff it laid off last year. They accounted for 18.3 per cent of its employees at the end of last year. The report did not specify whether Mr Li was referring to profit before or after tax. Turnover of the parent was expected to reach 360 billion yuan this year, up 5.3 per cent from 342 billion yuan last year. Listed Sinopec - 54.8 per cent owned by Sinopec Group - is forecast by 20 local brokerages to report a 15.8 per cent fall in net profit to 16.09 billion yuan from 19 billion yuan last year, according to a poll by Multex Global Estimates. Turnover of the listed subsidiary is projected to be 307.32 billion yuan, down 4.8 per cent from last year. The estimates are based on international accounting standards. The subsidiary - listed in Hong Kong in October last year and on the Shanghai bourse in August this year - has some of the group's most efficient oil production and refinery operations. In the newspaper report, Mr Li was quoted as saying the parent has saved wage costs of 1.9 billion yuan this year as a result of the lay-offs. He thought they would bring further annual savings of 4.7 billion yuan. Next year Sinopec Group plans to cut its staff again, by 55,000 people. The company said it would shed 260,000 workers and Sinopec 100,000 between this year and 2005.Sinopec had been planning to cut 27,000 staff this year. The cost of lay-offs is estimated to be in the region of 1.02 billion yuan, which will save it 350 million yuan annually.