Three China Oil Giants ' Profits Forecast to Fall 31.3%

Mon. February 16, 2009; Posted: 07:11 AM

BEIJING, Feb 16, 2009 (SinoCast Daily Business Beat via COMTEX) -- SNP | Quote | Chart | News | PowerRating -- China's three biggest oil giants are predicted to have gained profits of CNY 222.8 billion last year with a drop of 31.3 percent year on year.

The amount marked a new low in recent years due to the drastic drop of oil prices in 2008. China Petroleum & Chemical Corp. (Sinopec, SEHK: 0386 and SHSE: 600028), under the wing of China Petrochemical Corporation (Sinopec Group), one of the Big Three, predicted on January 23, 2009 that its 2008 net profits would slump more than 50 percent, told previous reports.
China National Offshore Oil Corp. (CNOOC), another one on the Big Three list, gained profits of nearly USD 10 billion in 2008, disclosed its president Fu Yucheng.
If the changing exchange rate is not taken into account, the profits jumped more than 20 percent from 2007 when its profits totaled USD 7.86 billion. CNOOC, parent of CNOOC Ltd. (NYSE: CEO; SEHK: 0883), reaped sales revenues of USD 29 billion in 2008, rising 22.4 percent year on year, according to the preliminary statistics.
In fact, the whole petrochemical industry witnessed a negative growth in December 2008, which marks that the industry has been on the decline after an about-10-year fast growth.
The Chinese government is to unveil the petrochemical industry adjustment and revitalization plan, which advises the country to separately store 3 million tons, 6 million tons, and 10 million ton of refined oil from 2009 to 2010.
Sinopec Group and China National Petroleum Corporation (CNPC), also one of the three biggest oil producers, are preparing for refined oil reserves, because the fuel prices hover around a low level.
The Chinese government will earmark CNY 100 billion for the upgrading of refined oil products and about CNY 400 billion for the construction of 20 new related projects in 2009 and 2010, said sources. The CNY 100 billion will possibly be offered by CNPC and Sinopec Group, guessed they.
This year, the country will put CNY 60 billion into the quality improvement of 60-million-ton gasoline in accordance with the National Emission Standard Phase III and Phase VI.
Next year, it will inject CNY 40 billion into the quality upgrading of 60-million-ton diesel oil to meet the III and Phase VI standards, which require low sulfur.
Sinopec Group pointed out that domestic retail oil prices would become stable, once it expanded refined oil reserves when the fuel prices stood at USD 40 per barrel.
(USD 1 = CNY 6.84)
Source: www.cnstock.com (February 16, 2009)
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