Sinopec’s profit recovery faces threat from Covid-19 spread

Bloomberg

China’s biggest oil refiner posted increased profits for the first quarter even as the country’s worst pandemic outbreak threatens a pullback in fuel demand.
Sinopec reported 23.3 billion yuan ($3.6 billion) in net income, an increase of 24% from the same period last year, according to an exchange filing. The Chinese oil giant, officially known as China Petroleum & Chemical Corp, had its best financial year in a decade in 2021.
While the firm’s core refining business saw a 15% increase in operating profit in the quarter, its outlook is being clouded by demand destruction due to covid lockdowns in cities like Shanghai. Strict travel curbs and shuttered factories have sapped demand for transport fuel. Costlier feedstock could also eat into gains from the refining and chemical segments, said Chia Cheng Chen, a Bloomberg Intelligence analyst.
China’s state-owned oil firms have benefited from rising crude and gas prices as they boost domestic production to meet government calls for enhanced energy security. Sinopec’s oil and gas output rose 3.7% in the first quarter, compared with a 4% increase nationwide. Capital expenditures were 25.38 billion yuan for the quarter, after it said it planned a record annual spend of 198 billion yuan this year.