Sinopec to lift 2023 crude throughput by 3% amid China's demand recovery

Sinopec, the world's top refinery by capacity, aims to lift crude throughput by 3% year on year in 2023 as it expects domestic demand for refined products and chemicals to grow rapidly as China strives to achieve an overall upturn in economic performance, the listed company said in its 2022 financial results released March 26.

"In 2023, we will seize the favorable opportunity arising from the steady development of the domestic economy and the recovery of demand for petroleum and petrochemical products, insist on driving growth in a stable manner, and strive to achieve effective quality improvement in different businesses and reasonable volume growth," Sinopec Chairman Ma Yongsheng said.

The refiner targets processing 250 million mt or 5.03 million b/d of crude in 2023, up 3.2% from realized throughput of 4.88 million b/d in 2022 but below 5.14 million b/d in 2021.

Sinopec is China's biggest consumer of imported crude with a refining capacity of 5.78 million b/d at end 2021.

The increase in throughput will underpin Sinopec's target of increasing oil product output by 4.3% year on year to 146 million mt in 2023, in line with the 146.21 million mt produced in 2021, the company said in the report.

It also plans to increase oil product procurement from other domestic producers to support its domestic oil product sales to recover 7.7% year on year to 175 million mt, the highest since reaching 184.45 million mt in 2019.

Sinopec refining sources said its will lift the gasoline and jet fuel production yields in particular as demand growth for transportation fuels is strong amid China's reopening.

In 2022, gasoil was the only clean product to see year-on-year rises in production and sales, at 5.4% and 8.6%, respectively, according to the report.

Upstream production to rise 1%

In response to Beijing's call for energy security, state-owned Sinopec plans to produce 495.53 million boe or 1.36 million boe/d of oil and gas in 2023, up 1.3% from 1.34 million boe/d in 2022.

Its domestic natural gas output is targeted to rise 3.4% on the year to 1.29 Tcf to make up for a slight decline in crude oil production. Sinopec plans to produce 29.03 million barrels of crude from overseas assets in 2023, down 3.5% from 2022, while domestic crude production is targeted to edge up 0.2% to 251.2 million barrels.

At the same time, the company plans to cut its capital expenditure for exploration and production by 10.7% to Yuan 74.4 billion ($10.83 billion) from Yuan 83.3 billion in 2022. Despite the reduction, the budget for the segment remains higher than spending prior to 2022; Sinopec spent only Yuan 42.2 billion five years ago in 2018.

Sinopec in the report said it plans to reduce budgets in almost in every segment, resulting to a 12.3% year-on-year reduction in total capax to Yuan 165.8 billion.

The heaviest cut is in its chemical segment, by 13.1% to Yuan 16.6 billion.

In 2022, earnings before interest and taxes of chemical segment slumped 84.4% year on year to Yuan 3.5 billion amid slow demand and surging capacity. Sinopec's long-term goal is transferring oil production to high-end chemical production.

Sinopec increased its budget only in the corporate and others segment, by 5.8% from 2022 to Yuan 5.5 billion, for research and development and information technology, according to the report.

Sinopec's capital expenditure:

(Unit: billion yuan)

Source: Company report

Sinopec's operation targets:

*Oil, gas outputs from both domestic and overseas

*1 bcf of gas = 0.167 boe

Source: Company report

Sinopec's domestic production

(Unit: million mt)

^ Divide Sinopec's output by China's total production

Source: Company report, the National Bureau of Statistics