Sinopec 2011 net profit climbs 2%

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Shares in China Petroleum & Chemical Corp. rose in Hong Kong on Monday after the Beijing-based company reported its net profit grew two per cent last year on higher oil prices and fuel sales.

The largest refiner in Asia by capacity said it expected China's demand for petrochemical products to continue to grow this year, albeit more slowly.

"We estimate that in 2012, the price of international crude oil will generally fluctuate in a high range due to the tight geopolitical situation," chairman Fu Chengyu said in a statement late on Sunday.

Net profit for the calendar year was 73.23 billion yuan ($11.6 billion) compared to 71.78 billion yuan in 2010, the company said.

Revenue climbed 31 percent to 2.51 trillion yuan thanks to higher contributions from the upstream exploration and production segment.

The company's shares were 0.46 per cent stronger at HK$8.68 in mid-morning trade in Hong Kong.

Higher oil prices helped the oil and gas producing operation increase its operating profit 52 percent to 71.63 billion yuan. The average selling price of Sinopec's crude oil rose 38 percent to 4,621 yuan a ton from 2010.

The refining business posted an operating loss of 35.78 billion yuan, reversing an operating profit of 15.85 billion yuan as higher fuel imports undercut refining margins and the government's control on fuel product prices.

"The complex and turbulent worldwide political and economic environment in 2011 saw global crude oil prices remain high and volatile," the company said in a statement.

"Rising domestic inflationary pressure and continuing price controls on refined oil in China generated immense challenges for the business.

"In response to those difficulties, Sinopec continued to review the company's processes in an effort to increase efficiency, ensure safe production, and improve energy savings and reduce emissions.

"As a result, the company achieved the best performance in its history." Strong domestic demand for gasoline and diesel fuel forced the company to increase imports that cut into the bottom line, it said.

In response to strong energy demand, Sinopec plans to boost the production of its refining business.