Sinopec profit soars 85% on new oil pricing rule

Shanghai, April 29 (Gasgoo.com) China Petroleum & Chemical Corp (Sinopec), Asia's biggest refiner, said its net profit jumped 85 percent in the first quarter largely due to improvements in refining margins, reported Xinhua on Wednesday.

Net profit totaled 11.219 billion yuan ($1.64 billion) in the first quarter, thanks to the country's adjusted refined oil pricing mechanism since the beginning of this year, the company said in a statement to the Shanghai and Hong Kong stock markets.

Operating profit in refining operations reached 7.3 billion yuan in the first three months, compared with a loss of 25 billion yuan a year earlier. The company is expecting a 50 percent increase in first-half profit.

The Chinese government launched a new fuel pricing mechanism on December 18, 2008, which provides for a review of refined oil products prices against international crude prices every 20 days.

Analysts said at that time that the refining businesses of Sinopec and rival PetroChina would return to profitability following the implementation of the new fuel pricing mechanism.

But PetroChina Company Limited reported Monday its net profit in the first quarter slid 35.3 percent year on year to 18.956 billion yuan, pulled down by the low price of crude oil and less demand, according to the report.

PetroChina is the leading oil producer of China, with most crude oil it refined produced by the company itself, while Sinopec has over 70 percent of its crude oil imported.