Sinopec to boost production
biz.scmp.com
Friday, November 1, 2002
ERIC NG
China Petroleum & Chemical (Sinopec) aims to boost its crude oil production volume by about 6.5 per cent to between 40 million and 41 million tonnes and double natural gas production to 10 billion cubic metres (bcm) in 2005 from this year's levels.
Zhang Jiaren, chief financial officer of the country's No 2 oil producer, told analysts that the company planned to invest up to 14 billion yuan (about HK$12.26 billion) to develop its proven oil and gas reserves over the next three years.
The investment is estimated to be sufficient for it to reach its 2005 production targets.
Mr Zhang unveiled the plan while commenting on the company's results for the first nine months of the year. Sinopec posted a net profit of 10.09 billion yuan in the period, representing a 2.79 per cent decline year on year.
Mr Zhang said Sinopec planned to sell 38.1 million tonnes of oil both this year and next, while gas sales were expected to grow to 5.3 bcm next year from 5.1 bcm this year.
Revenues slipped 1.59 per cent year on year to 238.15 billion yuan in the nine months, due primarily to a 13.8 per cent fall in the realised oil sales price to US$21.2 a barrel in the nine months from US$24.6.
The realised gas price has risen marginally to US$1.96 in the nine months from US$1.94 in the year-earlier period.
In the nine months, oil production was flat at 201.78 million barrels, compared with 201.3 million barrels, while gas production rose 9.08 per cent to 131.88 billion cubic feet.
Exploration successes have seen the company add 213 million tonnes of proven oil reserves and 89.3 bcm of proven gas reserves in the first nine months this year.
Analysts expect Sinopec's net profit to fall 3.1 per cent year on year this year to 15.52 billion yuan, according to Thomson First Call's consensus estimates.
Small oil production volume growth has limited the company's profit increase, but Sinopec has been cutting costs to bolster profitability.
Market watchers are watching closely when Sinopec will acquire oil and gas fields overseas to boost production.
Peers, No 1 oil producer PetroChina and dominant offshore oil producer CNOOC have already made substantial overseas acquisitions this year.
Mr Zhang reiterated Sinopec's earlier stance that in order to reduce risks, its parent Sinopec Group would first buy the overseas assets, and they would only be sold to Sinopec when their attractiveness was more certain.
He said overseas assets that Sinopec would consider were oil fields that could provide at least a 12 per cent annual return.
Sinopec's parent earlier this month clinched a 20-year, US$393.75 million agreement to invest in Algeria's Zarzaitine field in the eastern Sahara desert. It had said earlier this year that it planned to buy 10 billion yuan worth of overseas oil and gas assets.
Turning to its refining business, Mr Zhang said Sinopec had increased production for most of its products by about 10 per cent year on year in the nine months.
After a loss of 412 million yuan in its refining operation in the first quarter, it posted a profit of two billion yuan in the second quarter and 1.82 billion yuan in the third. |
