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Sinopec's H1 oil product sales, throughput, upstream output met 2017 target

Highlights


Rare retail price cut boosted sales

Refining run down to 80% on heavy turnaround in Q2

Singapore — China Petroleum and Chemical Corp, or Sinopec, almost met its operational targets for the first half of 2017, with a slight year-on-year increase in domestic petroleum sales, its unaudited operational statistics for the period showed.

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Sinopec's total domestic sales volume of refined oil products edged up 0.82% from a year ago to 87.22 million mt in H1, according to data released late Thursday.

The volume hits 50% of the whole year target of 175 million mt.

Meanwhile, the H1 growth came despite a 3.12% year-on-year decline in the first quarter and was due to rare discounts offered in retail outlets in Q2.



Sinopec started cutting retail prices in mid-May in the eastern and northern provinces, and has now extended those cuts to eastern coastal and southern China.

The discount was as deep as 20% off the government-set guidance price.

This unusual move was believed to boost domestic retail sales and protect its 50% market share.

As a result, retail sales in Q2 registered a 0.2% rise on the year to 30.05 million mt.

Sinopec owns and operates 30,746 retail stations, accounting for about 30% of the total outlets in China, according to its Q1 report.

The marketing sector sells products from Sinopec's refineries to both international and domestic markets. It also resells products supplied from other refineries or blenders.


REFINING


Sinopec, Asia's largest refiner, raised H! crude throughput 1.63% on the year to 117.79 million mt (4.62 million b/d), slowed from the 3.1% growth in Q1 due to the heavy maintenance season in Q2.

It was also slower than the nationwide 3% year-on-year increase in H1, although meeting 49% of the annual throughput target of 240 million mt.

The H1 throughput translates into an average run rate of 80.6% based on the company's primary crude distillation capacity of 294.7 million mt/year, compared with a targeted utilization rate of 81.4% for 2017.

The company's total production of gasoline, gasoil and jet/kerosene rose 1.2% year-on-year to 74.11 million mt. Sinopec's three products accounted for 42.2% of China's total output, down from 42.9% a year earlier.

Meanwhile, Sinopec lowered its gasoil yield to 27.7% in H1 from 28.4% a year earlier, as the company made an effort to adjust its production structure in line with the structural changes in domestic demand.

Jet fuel yield rose to 11.1% from 10.6% a year earlier, while gasoline yield was unchanged at 24%.

The company's ethylene output also went up 2.4% on the year to 5.61 million mt in H1.


UPSTREAM


In the upstream segment, Sinopec raised its gas output 16.3% on the year to 452.12 Bcf or 12.8 Bcm in H1, more than half of the 879.9 Bcf goal for 2017.

The company missed its gas output target of 865 Bcf in 2016, producing only 734.8 Bcf.

Jiao Fangzheng, a senior vice president, said in March Sinopec would achieve a 14.9% year-on-year growth in natural gas production to 879.9 Bcf on healthy demand led by China's pollution control campaign.

The company plans to add 3 Bcm of annual output capacity at its flagship Fuling shale gas field in southwestern China to raise the field's accumulated production capacity to 10 Bcm/year this year.

Sinopec's H1 crude oil production was 145.98 million barrels, accounting for almost half of the 294 million barrels target for 2017.

Crude oil production from overseas projects was 22.82 million barrels in the first six months of the year, down 11.52% year-on-year.

Total domestic crude oil output declined 4.1% on the year to 123.16 million barrels.

The H1 decline was smaller than the 8.6% drop in Q1, and also slower than the 5.1% year-on-year nationwide reduction in H1.

Sinopec said earlier it had resumed some suspended production at the flagship Shengli block, which was believed to slow the production decline.

China produced 96.45 million mt of crude oil over the first six months, data from the National Bureau of Statistics showed Monday.

Table: Sinopec's domestic oil production for H1 2017

--Oceana Zhou, oceana.zhou@spglobal.com
--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com