July 20 (Bloomberg) -- China Petroleum & Chemical Corp., Asia’s biggest refiner, boosted first-half crude-oil output by 4.3 percent after overseas production surged.
Output was 163.09 million barrels in the six months ended June 30, according to a document posted on parent China Petrochemical Corp.’s website today. Overseas production jumped 82 percent to 11.13 million barrels from a year earlier as its Angola oilfields returned to running at full capacity after maintenance last year.
Sinopec, as the company is known, is boosting oil production to counter losses in its refining business. It posted a 35 percent drop in first-quarter profit as margins at its processing units narrowed.
“The growth is well within expectations and in line with the company’s goal of about 4 percent annual production growth,” said Shi Yan, a Shanghai-based analyst at UOB-Kay Hian Ltd. “The money-losing trend of its refining business won’t change unless the government changes its policy to cap retail fuel prices.”
China, the world’s second-biggest oil consumer, reduced fuel prices for the third time since May on July 12, eroding margins at its biggest two state-owned refiners, including Sinopec and PetroChina Co.
Sinopec shares gained 1.9 percent to HK$7.06 at the close of trading in Hong Kong, before the document was posted. The benchmark Hang Seng index rose 0.4 percent.
Sinopec’s refining losses will widen in the second quarter because of price cuts and high-priced inventories, UOB’s Shi said.
“Sinopec has at least two months of stockpiles of high-priced inventory to deplete in the second quarter before it can process the lower-priced crude-oil imports,” Shi said. “Cheaper crude imports will help its refining margin in the second half, but second quarter should see the worst refining losses of the year.”
Sinopec processed 109.76 million metric tons of crude oil in the first half, up 1.1 percent from a year earlier, according to the document. Its gasoline output rose 7.9 percent to 19.61 million tons.
Natural-gas output gained 14 percent to 289.93 billion cubic feet, according to the document.
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