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China Petroleum & Chemical Corporation, or Sinopec, reported this weekend a 20.1% decline in its net profit for the first half of 2023, amid lower international crude oil prices and weaker-than-expected fuel demand recovery in China.
The net profit of Sinopec, the world’s top refiner by capacity, fell to $4.82 billion (35.11 billion Chinese yuan) from January to June, compared with a profit of $6 billion (43.9 billion yuan) for the same period of 2022.
The average spot price of Brent was $79.8 per barrel in the first half of this year, down by 25.8% year over year, the Chinese giant said.
Sinopec acknowledged that its refining division was challenged by the lower crude oil prices and narrowed profit margins of certain refined oil products.
Refining output was nevertheless higher than in the first half of 2022 when Covid-related restrictions in China were still in place and were dragging down demand for petroleum products. In the first half of 2023, Sinopec processed 126.54 million tons of crude oil, up by 4.8% year-on-year, and produced 76.07 million tons of refined oil products, up by 10.3%, with kerosene output soaring by 63.5% year-on-year.
In the chemicals division, Sinopec flagged weak domestic demand and reported an operating loss for the January-June period compared to a small profit for the same period of 2022.
Other Chinese firms also reported lower earnings this year.
CNOOC Ltd, China’s state-held oil and gas giant, has reported a decline of 11.3% year over year in its net profit for the first half of 2023, as lower oil prices weighed on profitability.
CNOOC posted $8.7 billion (63.8 billion yuan) in net income between January and June, down from the same period last year as lower commodity prices weighed on realized prices at all major companies during the second quarter of 2023 and the first half of 2023.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.