First half-yearly losses in more than 20 years for Chinese oil giants

Audio 01:58

The Sinopec refinery in Wuhan, Hubei province (illustrative image).

REUTERS / Stringer

By: Claire Fages Follow

5 mins

Chinese oil companies are not spared by the coronavirus crisis.

After PetroChina, it is Sinopec's turn to deplore its first half-yearly losses in more than 20 years.

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China recovered faster from Covid-19, but the coronavirus nonetheless pulverized the profits of its oil giants.

Sinopec is in the red for the first time since its listing on the Hong Kong Stock Exchange in 2000. A loss of 22 billion yuan, or 3.2 billion dollars.

Sinopec or China Petroleum & Chemical Corp may be the leading refiner in Asia, it was hit like its international competitors by the fall in demand for fuels: it transformed "only" 111 million tonnes of crude in January. last June, 10% less than in 2019.

The group must write down assets, sell its stake in the pipelines and reduce its capital expenditure by 10% in 2020.

Impairment of assets but sustained production of hydrocarbons

The first Chinese oil producer PetroChina published even worse results a few days ago: 30 billion yuan or 4.4 billion dollars in losses over the first six months of the year.

PetroChina suffered from the plunge in oil prices and the slowdown in Chinese and global crude demand.

It too depreciates its assets by $ 1.2 billion.

Finally CNOOC, China National Offshore Oil Corp, more oriented towards the exploitation of hydrocarbons abroad, remains in the green but sees its profits plunge by two thirds.

Maintenance of crude oil prices " 

Paradoxically, the three major Chinese public oil groups have continued to produce hydrocarbons in a sustained fashion.

In the first half of the year, Sinopec's production fell only 0.4%, CNOOC's jumped 6%, PetroChina's by 7%.

But the sentiment for the rest of the year is very mixed.

Sinopec certainly believes in a strong recovery in oil and petrochemical demand in China, but considers that crude prices will continue to “ 

 ” in the second half of the year, due to instability and uncertainty growing impact on the fate of the global economy.

ChinaCorp expects a difficult end of the year with increased competition on Chinese soil, since foreign oil companies have recently been able to invest there without a local partner.

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