BEIJING (Reuters) - Chinese refining giant Sinopec warned it would keep its output rates stable even as it expects fuel sales to drop in the second half compared with January-June, a move that could add to a domestic glut of gasoline and diesel.
The country’s largest refiner said it was standing by its planned run rate as it reported first-half results on Sunday showing its best six-month profit in years. The bumper earnings meant Sinopec is the latest in a line of Chinese state oil majors to reap the benefit of last year’s crude price recovery.
Sinopec said it expected to sell 87.78 million tonnes of oil products in the second half of this year, down from 98.55 million tonnes in the first half. The company sees crude oil processing rates stable in the second half at 118 million tonnes, or 4.79 million barrels per day.
The outlook adds to market fears that major oil majors, as well as independents, may intensify price competition in order to secure market share in the retail market amid lower oil prices.
Sinopec, officially known as China Petroleum and Chemical Corp, reported a first-half net profit attributable to equity shareholders of 27.1 billion yuan ($4 billion), up 41 percent from the same period a year earlier, based on Chinese accounting standards. Profit rose 40 percent to 27.92 billion yuan during the period based on international accounting standards.
The company attributed the strong performance to higher prices and sales of downstream products compared to the year-earlier period. Revenue for the period rose 33 percent to 1.166 trillion yuan, based on Chinese accounting standards.
Sinopec also said it expects global oil prices to continue to fluctuate at low levels for the rest of this year, while structural adjustments in China’s energy sector mean natural gas demand will continue to grow quickly.
The company plans to pump 148 million barrels of crude oil in the second half, up from 146 million barrels in the first six months - a significant change after multiple years of declining output.
Meanwhile, natural gas production may drop to 427.5 billion cubic meters from 452 billion cubic meters in the first half, Sinopec said.
($1 = 6.6465 Chinese yuan renminbi)
Reporting by Elias Glenn, Josephine Mason and Meng Meng; Editing by Kenneth Maxwell