Fuel price reform boost for Sinopec Shanghai Petrochemical
Sinopec's second-largest oil refinery reported a first-half profit, thanks to an upgrade that cut costs and Beijing changing the fuel mechanism
Sinopec Shanghai Petrochemical, the operator of China Petroleum & Chemical's second-largest oil refinery, has posted a profit for the first half of the year, thanks to lower costs after a facility upgrade and Beijing's fuel pricing policy reform.
The company saved close to 400 million yuan (HK$500 million) of crude oil costs in the half because of more efficient material utilisation after a 6.3 billion yuan upgrade of its production facilities, chairman Wang Zhiqing said.
"The overhaul allowed us to refine crude oil with a wider variety of quality," he said. "Every US dollar of crude oil cost cut translates into some 700 million of savings for us annually."
He said the facility revamp helped cut overall crude consumption costs by just over US$1 a barrel compared with its rivals with less modern facilities, since it could produce the same fuel and chemical products by using cheaper, lower-quality crude.
Sinopec Shanghai said this month that its net profit would amount to 438 million yuan for the first half of the year, a turnaround from a loss of 1.19 billion yuan in the same period last year.
Part of this is attributed to Beijing's fuel price mechanism reform in March, which aims to link domestic prices to international price levels.