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Nation's Oil Giants Make Big Profits
China's No 2 and No 3 oil giants yesterday announced that they registered fat profits due to sales increases and cost-cutting efforts.
China Petroleum and Chemical Corp £¨Sinopec£©, the second largest domestic oil company, said its net profit in the first half of this year surged by 27.5 per cent to 9.5 billion yuan £¨US$1.1 billion£©, under the international accounting system.
Sinopec, the largest refiner in Asia, said in a statement that profit was derived from the expansion of crude oil and natural gas production, and that sales rose for refined oil and petrochemical products at a higher price during the period.
On Monday, China National Offshore Oil Company£¨CNOOC£© , the third largest oil company, also announced that it made pre-tax earnings of 6.5 billion yuan£¨US$785.9 million£©, climbing 11.3 per cent year-on-year.
But CNOOC's net profit for the first six months of 2001 dropped by 4.2 per cent to 4.62 billion yuan£¨US$558 million£© due to higher taxes.
The company is required to pay a normal 30 per cent profit tax, doubling a favourable 15 per cent that had been granted before CNOOC was listed in Hong Kong and New York in February 2001.
"Normalized tax rates resulted in a significant increase in tax expense of 1.84 billion yuan £¨US$222 million£© in the period, versus 977 million yuan £¨US$118.1 million£© from a year ago, adversely affected the company's net income," CNOOC said in a statement.
As for Sinopec, analysts said the company's profit growth resulted from the price hike of domestic refined oil products and the company's cost-cuttingg programme.
The current price for refined oil has increased by some 15 per cent since China decided to raise the domestic fuel price in line with the international market last June.
Meanwhile, Sinopec slashed production cost by 1.38 billion yuan£¨US$116.8 million£©during the period.
The result represents 63 per cent of Sinopec's cost-cutting target for this whole year.
CNOOC also said the improvement in cost management is a key factor for the strong performance.
The company achieved operating costs of 22.4 yuan £¨US$2.70£© a barrel, and depreciation expenses of 27.7£¨US$3.30£© yuan.
All of the above below the historical average.
Despite weakening oil prices, CNOOC registered a 5.7 per cent increase in oil and gas sales in the first half.
Sources: China Daily
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