Chinese majors are expected to reveal lower net earnings as a result of rising costs and refining losses.
Sinopec Corp, CNPC and CNOOC are all tipped to unveil lower profits for last year than in 2011, according to a Thomson Reuters survey of more than 30 share analysts. The survey predicts Sinopec is likely take the biggest hit, forecasting a 12.6% drop in net profits. CNOOC may also see profits fall by as much as 7.6%, with PetroChina faring little better with an expected 6% slump in profits.
China Petroluem & Chemical Corp, also known as Sinopec, could see annual profits fall by 12.6% to just 62.7bn Yuan. Sinopec, as Asia’s largest refiner and a major importer of foreign crude, is especially sensitive to fluctuations in global oil prices, which averaged out at $111 (Brent) last year, 3.5% higher than in 2011. Steep refining costs and government pricing curbs will also hurt overall profitability.
PetroChina, the listed arm of CNPC, is slated to see profits slump by 6% for many of the same reasons as rival state-owned giant Sinopec. Downstream oil refining and LNG imports are also likely to contribute to the falling profits.
China National Offshore Oil Corp (CNOOC a pure oil and gas producer with no refining or gas import operations, was unaffected by those particular factors. However, delays in the company’s acquisition of Canada’s Nexen, which was supposed to be completed last July, meant it missed annual production targets.
Nevertheless, oil companies maintain a positive outlook for 2013, citing new government plans to make oil pricing more market-oriented. The new pricing mechanisms would allow companies to adjust to global fluctuations quicker. This would mean increasing the price-at-the-pump costs, which would cover the tens of billions of Yuan in refinery upgrades due to take place this year.