BEIJING/SINGAPORE (Reuters) – China Petroleum & Chemical Corp, better known as Sinopec, plans to increase capital spending by nearly a quarter and raise refinery throughput by 5.5% this year as oil prices and energy demand recovered as the COVID-19 epidemic subsided.
Sinopec, Asia’s largest oil refiner and China’s second-largest oil and gas producer, plans to increase capital expenditure to 167.2 billion yuan ($25.55 billion), up from 135.1 billion in 2020.
Sinopec expects to spend 66.8 billion yuan on upstream exploration focusing on shale gas development in southwest China and construction of liquefied natural gas (LNG) terminals in coastal areas, up from 56.4 billion yuan last year.
“China’s economy is recovering and is expected to achieve relatively good growth. Demand for refined oil products is expected to recover strongly and demand for natural gas and petrochemical products will continue to grow,” the company said in a statement filed to the Shanghai Stocks Exchange on Sunday.
The company on Sunday reported a 42.9% drop in net profit to 32.92 billion yuan last year, the lowest since 2015 and largely in line with analysts’ forecast, as the pandemic dented fuel consumption during the months-long lockdowns.
Sinopec plans to raise its crude processing by 5.5% this year to 250 million tonnes, or 5 million barrels per day, more than recouping a 4.7% fall in 2020 as COVID-19 hammered fuel demand.
It also aims to raise its domestic refined fuel sales by nearly 9% this year to bring it on par with its 2019 levels.
In an earnings call on Monday, Sinopec said it booked 28.8 billion yuan worth of provisions for asset impairments, which included 8.5 billion yuan for oil and gas assets due to lower prices last year and another 11.85 billion yuan handed over to a government oil price risk fund.