Trade Resources Industry Views Sinopec, Petrochina Cut Domestic Oil Product Sales, Boost Exports

Sinopec, Petrochina Cut Domestic Oil Product Sales, Boost Exports

China's state-owned oil giants Sinopec and PetroChina reported a modest 1.73 million mt or 0.7% increase in their domestic oil products sales in the first nine months of 2015, but exports rose by 2.59 million mt or 12% in the same period, Platts calculations based on recently released results by the two companies showed.

The data from the companies, which account for around 85% of China's domestic market share, underscores the softness in China's oil demand and illustrates how refiners are ramping up exports in a bid to reduce rising stocks.

Sinopec's domestic oil product sales edged up 0.8% year on year to 126.71 million mt over January-September, while exports rose 12.4% to 14.04 million mt, the company's third-quarter report released last week showed. Total sales came in at 140.75 million mt, up 1.9%.

In comparison, PetroChina's gasoline, jet/kerosene and gasoil sales rose 1.5% year on year to 119.3 million mt, according to a report released last week.

PetroChina does not split its sales between the export and domestic segment, but according to Platts calculations, the company sold around 109.54 million mt of these three oil products to the domestic market, up 0.6% from last year, but exports increased 12% to around 9.76 million mt.

PetroChina said in its press release that the challenges in the domestic oil and gas market, including oversupply and a mismatch between production and sales, will remain unchanged.

Amid sluggish demand and oversupply, both Sinopec and PetroChina reported a drop in the earnings of their marketing segments in the first three quarters.

Sinopec's marketing profit declined 18.7% year on year to Yuan 21.5 billion, while PetroChina reported a loss of Yuan 978 million compared with a profit of Yuan 10.57 billion in the same period of 2014.


In the refining segment, both Sinopec and PetroChina cut their operating rates over January to September.

During the period, Sinopec refined 178.32 million mt of crude, up 1.4% year on year, the company said.

Based on Sinopec's reported refining capacity of 292.4 million mt/year as of end-December 2014, its refinery utilization averaged 81.5% in the first three quarters of 2015, down from 83.3% in the same period of last year.

Meanwhile, PetroChina cut its refinery utilization more sharply to average 79.5% in the first nine months of 2015 from 84.9% a year earlier.

A steeper run rate cut by PetroChina can be attributed to its refineries' relatively higher yield of gasoil -- demand for which has been hardest hit.

Though PetroChina has adjusted yields, gasoil still accounts for 42% of its total output compared with 30% for Sinopec.

Sinopec and PetroChina's combined throughput accounted for 72% of China's total throughput, down from the 75% in the same period last year.

This is against a 5% increase in the country's total throughput over the period and indicates that more competition is expected in China's refining sector.


Sinopec's oil and gas production fell 1.84% year on year in the first nine months, while PetroChina saw an increase of 3.6%.

Both companies clocked declines in domestic crude production, but a growth in overseas output.

Sinopec cut its capex by 45% to Yuan 38.07 billion in the first nine months of the year from Yuan 69.39 billion in the same period 2014.

In the beginning of 2015, the company set a goal to cut total capex by 12% from 2014 to Yuan 135.9 billion this year.

PetroChina cut its capex to Yuan 147.8 billion over January-September, down 21.7% from Yuan 189.9 billion in the same period last year.

At the beginning of this year, PetroChina had targeted a cut in its capex to Yuan 255 billion from Yuan 266 billion for the whole year of 2015.

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