Sinopec Swings Back Into Profit After Pipeline Spin-Off

China’s state-owned oil conglomerate China Petroleum & Chemical Corporation swung back into the black in the third quarter, thanks to more than 52 billion yuan ($6.7 billion) it made from selling assets to China’s new national pipeline operator.

The oil giant, also known as Sinopec, reported a profit of 46.39 billion yuan for the July to September period, offsetting two straight quarterly losses and taking its year-to-date profit to 23.5 billion yuan, according to a Thursday filing to the Shanghai Stock Exchange. Still, the reading was down 46% compared with the same period last year.

Sinopec, the country’s biggest refiner, recorded a loss of 22.9 billion yuan for the first half of the year due to a double-whammy of slumping oil prices and sluggish domestic demand for petroleum products brought about by the coronavirus pandemic.

The company received a total of 52.7 billion yuan in cash during the third quarter from selling its gas and oil pipeline assets to PipeChina, as well as a 14% stake in that newly formed giant.

Excluding all one-time gains and losses, Sinopec remained unprofitable with a loss of 10.3 billion yuan for the July to September period.

Sinopec’s crude oil throughput went up 1.9% year-on-year in the July to September period to 63.5 million tons, bringing its first nine months of crude throughput to 174.5 million tons.

Revenue from the refining sector made up nearly half of Sinopec’s total pre-tax revenue for the period with 31.6 billion yuan. The drilling sector contributed 13.2 billion yuan and sales returned some 18.2 billion yuan.

Its gasoline output dipped 1.4% year-on-year for the three months to September to 15.6 million tons, while diesel output picked up 3.7% year-on-year to 30.5 million tons during the same period.

Meanwhile, Sinopec’s crude output in the third quarter dipped 1% compared with the same period last year to 70.4 million barrels, while natural gas output declined 1.6% year-on-year to 260 billion cubic feet.

The company sold 123.2 million tons of refined products domestically in the January to September period, down by 11.5% year-on-year.

Contact reporter Lu Yutong (yutonglu@caixin.com)

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