Sinopec Shanghai Petchem to raise second-half crude throughput

BEIJING (Reuters) - Sinopec Shanghai Petrochemical, a refining subsidiary of Asia’s top refiner Sinopec, plans to raise daily crude oil throughput by 7.8% in the second half of 2020.

FILE PHOTO: A man stands next to a logo of Sinopec, or China Petroleum and Chemical Corporation, at an expo on rubber technology in Shanghai, China September 19, 2018. REUTERS/Stringer

The Chinese company aims to process 7.68 million tonnes of crude oil in July-December, equivalent to 304,700 barrels per day, a company official said at a briefing on Thursday.

That compares to 7.02 million tonnes of crude oil in the first half of 2020, which was down 6.1% from the same period last year due to the coronavirus outbreak and refinery overhaul.

The firm has annual crude refining capacity of 16 million tonnes.

That indicates Sinopec Shanghai would still lag behind its 2020 crude oil throughput target of 15.3 million tonnes.

Shanghai Petchem recorded a net loss of 1.7 billion yuan ($247.10 million) in the first half of 2020 based on Chinese accounting standards, as the coronavirus pandemic dampened fuel demand, according to company statements filed with the Shanghai Stocks Exchange.

“The coronavirus outbreak had brought huge pressure on our production and operation in the first half of 2020...We were forced to cut crude throughput...and we were just able to ease inventory pressure since May,” said Huang Fei, a vice general manager at Shanghai Petchem at the briefing.

Huang also said the coronavirus crisis had forced the company to cut fuel exports in the second quarter.

However, the group’s average crude oil refining cost in the first six months of 2020 fell 17.9% year-on-year to 2,717 yuan per tonne, or around $54 per barrel, thanks to the decades-low oil prices.

Shanghai Petchem bought around 84% of its crude oil from the middle east and around 10% from Latin American countries in January-June.

It plans to maintain a full-load refining operation in the second half of this year, in particular increasing production of low sulphur marine fuel.

“We are confident of turning losses into gains in the second half and posting a full-year profit,” said Guan Zeming, general manager of Shanghai Petchem.

(This story corrects to show the average refining cost in para 9 as yuan per tonne)

Reporting by Muyu Xu and Chen Aizhu. Editing by Jane Merriman