Sinopec Corp reported a 6.9% decline in net profit for the year 2022. The net profit for last year was 66.3 billion yuan ($9.65 billion) compared to 71.21 billion yuan in 2021. This decline is due to Beijing’s COVID-19 restriction measures, which have weakened demand for fuels and chemicals.
Sinopec’s net profit impacted by Chinese COVID measures in 2022
China’s demand for natural gas, petrochemicals and refined oil products was lackluster in 2022 due to several factors. The strict COVID measures in China have had a significant impact on transportation fuel consumption. The Chinese company recorded a general decline (-11% petrol, -18.4% aviation fuel). Sales of chemical fibers also fell by 18.1%.
Higher prices for oil and gas allow for a high net profit
However, Sinopec still recorded the third highest net profit in a decade, thanks to higher oil and gas prices. In 2023, Sinopec plans to produce 280.23 million barrels of crude oil and 1,292 billion cubic feet (bcf) of natural gas, compared to 280.86 million barrels of crude oil and 1,248 bcf of gas produced in 2022. Sinopec’s crude throughput is also expected to reach 250 million tons, up 3.3% from 2022.
Sinopec makes a positive forecast for the Chinese economy in 2023
Sinopec expects China’s economy to recover in 2023, which will lead to a sharp increase in domestic demand for natural gas, refined fuels and chemicals. Global oil prices are also expected to remain high due to geopolitics and inventory levels.
Investment projects and fund raising for Sinopec
Sinopec plans to spend 165.8 billion yuan ($24.14 billion) on capital expenditure this year, down 12% from the actual expenditure of 189.1 billion yuan in 2022. The company aims to raise up to 12 billion yuan in a private A-share offering to fund its expansion plans. The company has also set aside 12.7 billion yuan for asset impairments in 2022.
