China Petroleum & Chemical Corporation Recorded a Surge in Operating Results During the First Half of 2013, Net Profit Increased by 24% Year-on-Year

BEIJING, Aug. 25, 2013 /PRNewswire/ -- China Petroleum & Chemical Corporation

("Sinopec" or "the Company") (HKEX:386; CH:600028; NYSE: SNP) today announced

its interim results for the six months ended 30 June 2013.

Financial Highlights:

- In accordance with International Financial Reporting Standards ("IFRS"),

the Company's turnover, other operating revenues and other income was

RMB1,415.244 billion, up 5.0% year-on-year. Operating profit was RMB46.741

billion, an increase of 16.6% year-on-year. Net profit attributable to

owners of the Company was RMB30.281 billion, a 23.6% increase year-on-year.

Earnings per share was RMB0.262, up 20.7% over the same period last year.

- In accordance with the PRC Accounting Standards for Business Enterprises

("ASBE"), the Company's operating income was RMB1,415.244 billion, up 5.0%

year-on-year. Operating profit was RMB43.693 billion, an increase of 30.4%.

Net profit attributable to equity shareholders of the Company was RMB29.417

billion, a 24.1% increase year-on-year. Earnings per share was RMB0.254, an

increase of 21.0% year-on-year.

- The Board of Directors approved an interim dividend of RMB0.09 per share,

representing a 20.9% increase in cash dividend over the same period last

year.

In the first half of 2013, global economic recovery remained weak, while

China's economy grew steadily with 7.6% GDP growth over the same period last

year. Domestic demand for oil products and chemical products continued to grow.

Prices of chemical products dropped due to an increase in imported products.

The Chinese government further improved the pricing mechanism for oil products

and announced an adjustment to the price of natural gas.

BUSINESS REVIEW

Exploration and Production Business

In the first half of 2013, international oil prices hit an early high and then

eased, fluctuating at a high range for the period. Brent spot price for crude

oil averaged USD107.50 per barrel, down by 5.15% compared with the

corresponding period in 2012. Domestic oil prices moved in line with the

international market.

The Company achieved excellent results in oil and gas exploration through

domestic growth in five key areas, which include Tarim Basin, the western rims

of the Junngar Basin, the Ordos Basin, the Sichuan Basin and the Xihu

depression. In exploration, the Company made major breakthroughs in new blocks

such as the Tarim Basin, and discoveries in new locations, strata and types.

The Company also made progress in exploration evaluation in key areas. In oil

and gas development, the Company maintained a highly efficient level of

production, achieving domestic production of 153.66 million barrels of crude

oil, up by 1.1% compared with the corresponding period in 2012, and 324.14

billion cubic feet of natural gas, up by 11.8% compared with the corresponding

period in 2012. The Company also made major progress in the Fuling shale gas

project and launched development of coal-bed methane in South Yanchuan. In the

first half of 2013, the overseas equity oil production of the Company reached

11.78 million barrels, an increase of 5.8% compared with the corresponding

period in 2012.

In the first half of 2013, the operating revenues of this segment were RMB117.2

billion, representing a decrease of 7.0 % over the same period in 2012. The

Exploration and Production Segment operates fairly smoothly. However, due to

the fall in oil prices, the segment realised RMB30.9 billion of operating

profit in the first half of 2013, down by 23.5% on a year-on-year basis.

Summary of Operations for the Exploration and Production Segment

Six-month period Changes

ended 30 June

2013 2012 %

Oil and gas production (mmboe) 219.46 211.42 3.80

Crude oil production (mmbbls)1 165.44 163.09 1.44

China 153.66 151.96 1.12

Overseas 11.78 11.13 5.84

Natural gas production (bcf)2 324.14 289.93 11.8

1: For domestic production of crude oil, 1 tonne = 7.1 barrels; for overseas

production, 1 tonne = 7.27 barrels.

2: For production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining Business

In the first half of 2013, the Company adjusted its product mix in response to

changes in domestic market demand, producing more gasoline, jet fuel and other

high-value-added products that sold well in the market and increasing the

export volume of its products. Sinopec upgraded fuel quality and considerably

increased the production of gasoline and diesel above GB IV standards. The

Company optimised the marketing of LPG, asphalt and paraffin by taking

advantage of its strengths in specialisation.

In the first half of 2013, refinery throughput was 115 million tonnes,

representing a growth of 5.17% over the same period last year. Oil product

output was 69.75 million tonnes, rose by 5.76% compared with the corresponding

period in 2012. The growth of gasoline and kerosene production was 16.01% and

15.31% respectively.

In the first half of 2013, the operating revenues of this segment totaled

RMB644.2 billion, representing an increase of 0.9% over the same period of

2012. This was mainly attributable to the increased sales volume. In the first

half of 2013, the improved domestic refined oil product pricing mechanism was

in effect. The refining margin of the Company was RMB209.5 per tonne, a

significant increase over the same period in 2012. The segment turned into

profit, with an operating profit of RMB0.2 billion in the first half of 2013.

Summary of Operations for the Refining Segment

Unit: million tonnes

Six-month period Changes

ended 30 June

2013 2012 (%)

Refinery throughput 115.44 109.76 5.17

Gasoline, diesel and kerosene 69.75 65.95 5.76

production

Gasoline 22.75 19.61 16.01

Diesel 38.64 39.10 (1.18)

Kerosene 8.36 7.25 15.31

Light chemical feedstock 18.82 18.53 1.57

production

Light yield (%) 76.20 77.20 (1.0)

percentage

points

Refining yield (%) 94.61 95.41 (0.8)

percentage

points

Note: Refinery throughput is converted at 1 tonne = 7.35 barrels;

Includes 100% of production of joint ventures.

Marketing and Distribution Business

In the first half of 2013, in response to changes in supply and demand in the

domestic market and the implementation of the newly-announced oil products

pricing mechanism, the Company adjusted its marketing strategies by adopting

differentiated marketing, thus maximising its profitability. While increasing

sales volume, Sinopec focused on the retail market and expanded its size by

offering distinctive services. The Company strengthened its quality management

to ensure excellent oil products quality. The Company also vigorously promoted

growth in new businesses and in its non-fuel businesses, with the aim of

providing one-stop service to its customers. In the first half of 2013, total

sales volume of oil products increased to 88.05 million tonnes, up by 6.51%

over the same period last year. Total domestic sales volume reached 80.75

million tonnes, an increase of 4.83%, and sales of non-fuel businesses reached

RMB6.58 billion, an increase of 20.5% compared with the corresponding period in

2012.

In the first half of 2013, the operating revenue of this segment was RMB732.8

billion, an increase of 3.2% over the same period in 2012, which was mainly

attributed to the increased oil products sales volume. In the first half of

2013, the sales revenue of gasoline totaled RMB246.8 billion, representing an

increase of 10.5% over the same period in 2012; and the sales revenue of diesel

and kerosene totaled RMB344.7 billion and RMB60.6 billion, a decrease of 2.3%

and an increase of 3.9% respectively over the same period in 2012. In the first

half of 2013, the segment's operating profit was RMB16.9 billion, representing

a decrease of 16.8% over the same period in 2012.

Summary of Operations for Marketing and Distribution Segment

Unit: million tonnes

Six-month period Changes

ended 30 June

2013 2012 %

Total sales volume of oil products 88.05 82.67 6.51

Total domestic sales volume of oil products 80.75 77.03 4.83

Retail 55.52 53.15 4.46

Direct sales 16.07 15.68 2.49

Wholesale 9.16 8.20 11.71

Annualised average throughput per station 3,620 3,487 3.81

(tonne/station)

As of 30 As of 31 Change

June December

2013 2012 from the

end

of last

year

(%)

Total number of Sinopec-branded service 30,682 30,836 (0.50)

stations

Company-operated 30,669 30,823 (0.50)

Chemicals Business

In the first half of the year, the Company further optimised its feedstock

structure and cut feedstock costs by using more light feedstock. The Company

sharpened its market analysis; strengthened the integration of R&D, production

and marketing; optimised operations and utilisation of facilities; and

introduced new products to improve its product mix. The Company improved its

marketing tactics and customer service. The Company reinforced its supply-chain

management and operated with low inventory level. Ethylene production was 4.84

million tonnes, an increase of 0.64% compared with the corresponding period in

2012. Chemicals sales volume reached 28.06 million tonnes, up by 7.30% compared

with the corresponding period in 2012.

In the first half of 2013, operating revenue of the chemicals segment was

RMB211.5 billion, representing an increase of 5.4% over the same period in

2012, which was mainly due to the increase in the sales volume of chemical

products. In the first half of 2013, the segment suffered an operating loss of

RMB0.4 billion, a decrease in losses of RMB0.8 billion.

Summary of Operations, Chemicals Segment

Unit: thousand tonnes

Six-month period ended Changes

30 June

2013 2012 (%)

Ethylene 4,841 4,810 0.64

Synthetic resin 6,730 6,701 0.43

Synthetic fiber monomer and polymer 4,539 4,580 (0.90)

Synthetic fiber 699 674 3.71

Synthetic rubber 457 475 (3.79)

Note: Includes 100% of production of joint ventures.

Health, Safety and the Environment and Low-Carbon Growth

The Company strictly implemented an HSE accountability system, promoted OSHA

management standards, enhanced operation hazard prevention and maintained

safety in production. The Company increased its emphasis on environmental

protection, energy conservation and emission reduction as well as on green and

low-carbon growth. The Company established a dedicated department in the head

office to coordinate planning and management of these activities, to promote

energy performance contracting and the development of an energy management

system. The Company also launched the Blue Skies, Clean Water initiative. In

the first half of 2013, the Company's energy intensity dropped by 3.24%

compared with the corresponding period in 2012. Chemical Oxygen Demand (COD) in

discharged wastewater fell by 4.15% compared with the corresponding period in

2012, and SO2 emissions fell by 4.54% as compared with the corresponding period

in 2012.

Capital Expenditures

The Company has focused on improving the quality and efficiency of development

and has made progress in a number of key projects. The Company's capital

expenditures were RMB51.975 billion in the first half of 2013. Capital

expenditures for E&P were RMB24.996 billion, mainly for tight oil in south

Hubei, shallow heavy oil in west Shengli, new blocks in the Tahe Oilfield,

Yuanba and the Daniudi gas fields, and the Shandong LNG project. Capital

expenditures for the Refining Segment were RMB7.710 billion, mainly for

upgrading oil product quality and the revamping project for processing

lower-quality crude oil. In the Chemicals segment, RMB5.283 billion were used

for the construction of the Wuhan 800,000-tpa ethylene project, the Hubei

syngas-to-MEG project and the Hainan aromatics project. Capital expenditures

for the Marketing and Distribution segment were RMB11.612 billion, mainly for

building and acquiring service stations along expressways and in major cities

and for the construction of refined oil product pipelines and depots. The

Company added 501 new service stations during the period, of which 100 were gas

stations. RMB2.374 billion was used for the Corporate and Others, mainly for R&

D facilities and IT projects construction.

Mr. Fu Chengyu, Chairman of Sinopec said: "We saw a challenging and complex

global economy and energy market in the first half of 2013. In response to

market changes, Sinopec worked hard to expand sales, adjust raw material and

feed stock mix, as well as product mix to achieve the resulting good

performance. Sinopec has been focusing on shareholder returns and long term

value for investors; our interim cash dividend announced represented a 20.9%

increase over the same period last year. As we develop the business, we will

continue to improve on quality and profitability, leveraging the strengths of

our integrated business model. We will strengthen our green and low-carbon

strategy and undertake corporate social responsibility so to achieve

sustainable growth."

BUSINESS PROSPECTS

In the second half of the year, the global economic recovery will continue to

be weak. The Chinese government will accelerate structural adjustments and

upgrades to maintain stable economic growth. In the second half of the year,

the Company expect balanced supply and demand fundamentals in the global oil

market and a steady growth in domestic demand for refined oil products and

chemicals. Given current circumstances, the Company will focus on improving the

quality and efficiency of development, always oriented toward the market and

centered on profitability, while ensuring safety and protection of the

environment. The Company will redouble its efforts to expand its markets,

optimise operations, unlock its potential, increase its efficiency, improve the

capacity of sustainable development, reinforce safe production practices and

achieve sound operating results.

In exploration and production, Sinopec will focus its exploration efforts on

commercial discoveries in key areas. In development, the Company will

strengthen development of mature oilfields, develop tight-oil resources

effectively and accelerate development in other key areas. The Company will

increase its activities in geological surveys and evaluation of potential areas

for development to achieve capacity replacement. In natural gas, the Company

will accelerate development in Yuanba, the medium and shallow formations of

west Sichuan and the Daniudi gas field. In unconventional resources, the

Company will conduct further evaluations of marine-facies shale gas resources

in the Sichuan basin and the surrounding areas. The Company will also increase

the pace of activity in the Fuling marine-facies shale gas zone and launch the

pilot development program on stream, along with the coal-bed methane project in

South Yanchuan. In the second half of the year, the Company expect to produce

23.29 million tonnes of crude oil and 9.2 billion cubic meters of natural gas.

In refining, with efficiency as Sinopec's top priority, the Company will

optimise crude procurement and allocation and reduce crude purchasing costs.

The Company will promote oil products upgrading, and supply the market with

clean fuels. The Company will also reinforce coordination between production

and marketing, adjust its product mix and utilisation rate, increase domestic

output of gasoline, jet fuel and other products with high value add, and expand

export volume. In the second half of the year, the Company plan to process 120

million tonnes of crude oil.

In marketing and distribution, the Company will continue to be market based,

strengthen resource planning, expand retail and direct sales volume, and

enhance operational quality and efficiency. The Company will promote one-stop

service for its customers, develop new product features and accelerate

development of its non-fuel businesses. In the second half of the year, the

Company plan to sell 84.25 million tonnes of oil products in the domestic

market.

In chemicals, the Company will continue to adjust facility utilisation and

production plans based on demand, modify the Company's product mix through

better integration of production, marketing and R&D, optimise the structure of

its feedstock to achieve lower costs, maintain operations with low inventory

level, implement differentiated marketing, develop new and specialty products,

and increase production of high-value-added products. In the second half of the

year, the Company plan to produce 5.05 million tonnes of ethylene.

APPENDIX

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING

STANDARDS FOR BUSINESS ENTERPRISES ("ASBE")

Six-month periods ended Changes

30 June

over the same

period of the

2013 2012

preceding

year

Items RMB million RMB (%)

million

Operating income 1,415,244 1,348,072 5.0

Net profit attributable to equity 29,417 23,697 24.1

shareholders of the Company

Net profit attributable to equity 29,196 23,259 25.5

shareholders of the Company

after deducting extraordinary gain/loss

items

Net cash flows from operating 32,903 20,554 60.1

activities

At 30 June At 31 Changes

2013 December

2012 from the end

of last year

RMB million RMB (%)

million

Total equity attributable to equity 546,386 513,374 6.4

shareholders of the Company

Total assets 1,274,233 1,238,522 2.9

Six-month periods ended Changes

30 June

over the same

period of the

preceding

year

2013 2012

ItemsNote RMB million RMB (%)

million

Basic earnings per share (RMB) 0.254 0.210 21.0

Diluted earnings per share (RMB) 0.239 0.202 18.3

Basic earnings per share after 0.252 0.206 22.3

deducting extraordinary

gain/loss items (RMB)

Weighted average return on net assets 5.49 4.89 0.6

(%)

percentage

points

Weighted average return on net assets 5.45 4.80 0.65

after deducting

percentage

extraordinary gain/loss items (%) points

Net assets per share attributable to 4.687 4.548 3.1

equity shareholders

of the Company (RMB) (fully diluted)

Note: Total share capital of Sinopec Corp. for the six-month period ended 30

June 2013 has increased as a result of H share issuances, bonus issues of

shares and conversion of capital reserves to all shareholders and conversion

of the A share Convertible Bonds. The data of 2012 have been retrospectively

adjusted in accordance with ASBE.

FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN

ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")

Changes

Six-month periods ended

30 June over the

same

2013 2012 period of

the

Items RMB million RMB million preceding

year(%)

Operating profit 46,741 40,083 16.6

Net profit attributable to owners of 30,281 24,503 23.6

the Company

Net cash generated from operating 32,903 20,322 61.9

activities

Changes

As of 30 June As of 31

December from the end

of last year

2013 2012

(%)

RMB million RMB million

Equity attributable to owners of the 543,717 510,914 6.4

Company

Total assets 1,273,688 1,257,944 1.3

Changes

over the

same

Six-month periods ended

30 June period of

the

preceding

2013 2012 year

(%)

Items1 RMB million RMB million

Basic earnings per share (RMB) 0.262 0.217 20.7

Diluted earnings per share (RMB) 0.246 0.209 17.7

Net assets per share (RMB) 4.664 4.527 3.0

Return on capital employed (%)2 3.88 3.65 0.23

percentage

points

Note 1: Total share capital of Sinopec Corp. as of 30 June 2013 has increased

as a result of issuance of H share, bonus issues of shares and capitalisation

of share premium to all shareholders and conversion of the A share

Convertible Bonds during the first half of 2013. The data of 2012 have been

retrospectively adjusted in accordance with IFRS.

Note 2: Return on capital employed=operating profit×(1-income tax rate)/

capital employed

THE FOLLOWING TABLE SETS FORTH THE OPERATING REVENUES, OPERATING EXPENSES AND

OPERATING PROFIT/(LOSS) BY EACH SEGMENT BEFORE ELIMINATION OF THE

INTER-SEGMENT TRANSACTIONS FOR THE PERIODS INDICATED, AND THE CHANGES BETWEEN

THE FIRST HALF OF 2013 AND THE FIRST HALF OF 2012.

Six-month periods ended 30

June

2013 2012 Change

RMB million RMB million (%)

Exploration on and Production

Segment

Operating revenues 117,242 126,117 (7.0)

Operating expenses 86,293 85,654 0.7

Operating 30,949 40,463 (23.5)

profit

Refining Segment

Operating 644,246 638,573 0.9

revenues

Operating expenses 644,033 657,074 (2.0)

Operating 213 (18,501) -

profit/

(loss)

Marketing and

Distribution

Segment

Operating 732,752 709,953 3.2

revenues

Operating expenses 715,900 689,701 3.8

Operating 16,852 20,252 (16.8)

profit

Chemicals Segment

Operating 211,521 200,769 5.4

revenues

Operating expenses 211,930 202,020 4.9

Operating (409) (1,251) -

loss

Corporate and

others

Operating 681,911 654,279 4.2

revenues

Operating expenses 682,925 654,635 4.3

Operating (1,014) (356) -

loss

Elimination of 150 (524) -

inter-segment profit

About Sinopec

Sinopec is one of the largest integrated energy and chemical companies with

upstream, midstream and downstream operations in China. Its principal

operations include: the exploration and production, pipeline transportation and

sales of petroleum and natural gas; the sales, storage and transportation of

petroleum products, petrochemical products, synthetic fiber, fertilizer and

other chemical products; import & export, as well as import and export agency

business of oil, natural gas, petroleum products, petrochemical and chemical

products, and other commodities and technologies; and research, development and

application of technologies and information.

Adhering to its corporate mission of "Enterprise development, Contribution to

the Country, Shareholder value creation, Social responsibility and Employee

wellbeing", Sinopec implements strategies of resources, markets, integration,

internationalization, differentiation and green low-carbon development with a

view to realize its vision of building a world first class energy and chemical

company.

Disclaimer

This press release includes "forward-looking statements". All statements, other

than statements of historical facts that address activities, events or

developments that Sinopec Corp. expects or anticipates will or may occur in the

future (including but not limited to projections, targets, reserve volume,

other estimates and business plans) are forward-looking statements. Sinopec

Corp.'s actual results or developments may differ materially from those

indicated by these forward-looking statements as a result of various factors

and uncertainties, including but not limited to the price fluctuation, possible

changes in actual demand, foreign exchange rate, results of oil exploration,

estimates of oil and gas reserves, market shares, competition, environmental

risks, possible changes to laws, finance and regulations, conditions of the

global economy and financial markets, political risks, possible delay of

projects, government approval of projects, cost estimates and other factors

beyond Sinopec Corp.'s control. In addition, Sinopec Corp. makes the

forward-looking statements referred to herein as of today and undertakes no

obligation to update these statements.

Investor Inquiries: Media Inquiries:

Beijing

Tel: (8610) 5996 0028 Tel: (8610) 5996 0028

Fax: (8610) 5996 0386 Fax: (8610) 5996 0386

Email: ir@sinopec.com Email: media@sinopec.com

Hong Kong

Tel: (852) 2824 2638 Tel: (852) 3512 5000

Fax: (852) 2824 3669 Fax: (852) 2259 9008

Email: ir@sinopechk.com Email: sinopec@brunswickgroup.com

SOURCE China Petroleum & Chemical Corporation