(Marketwatch, Oct 30, 2006) China Petroleum & Chemical Corp. (SNP) said Tuesday its third-quarter net profit rose 51.4%, as high crude prices and China's energy demand offset refining losses and a newly introduced windfall tax on oil sales.
Asia's largest refiner by capacity, commonly known as Sinopec, said its net profit for the three months ended September was CNY13.01 billion, up from CNY8.60 billion a year earlier.
Revenue rose to CNY280.78 billion from CNY224.13 billion.
Sinopec posted a third-quarter operating loss of CNY12.58 billion for its refining segment, stemming from escalating international crude prices and Beijing's cap on domestic oil product prices. The company had a refining loss of CNY6.63 billion in the same period last year.
Sinopec processed 108.7 million metric tons of crude, up 4.5% in the nine months ended September.
China has kept domestic prices for refined oil products far below the price of imported oil, as it tries to shield its vast agricultural population from inflation. Analysts expect China to gradually liberalize the pricing regime as it is moving toward a more market-oriented economy.
Sinopec produced 2.8% more crude between January and September than year earlier. Natural gas output during the period rose 18.1% to 5.35 billion cubic meters.
The average selling price of Sinopec's crude rose 34% to CNY3388 a ton.
Oil prices have pulled back from a record high in mid-July, but are still hovering around US$60/bbl, which may keep refiners in the red.
Domestic sales of refined oil products, such as gasoline and diesel, rose 7.2% to 83.1 million tons, as the booming economy is fueling the consumption of energy at a fast growth pace.
The Chinese government imposed a windfall profit tax on oil sales in late March. Companies in China that produce oil onshore and offshore and sell their products domestically are subject to a tax of 20% to 40% on the portion of the price above US$40 a barrel.
Sinopec said in the statement it plans to raise its capital spending budget for this year to CNY80.39 billion from CNY70 billion. It said the increases will be allocated to exploration and production, refining and chemicals segments.

Source:Marketwatch