Cost reduction and efficiency increase “two barrels of oil” made a difficult profit last year



On March 28, with the release of Sinopec’s financial report, the 2020 performance of “two barrels of oil” was released one after another. According to the financial report, in 2020, Sinopec’s operating revenue was 2.11 trillion yuan, a year-on-year decrease of 28.8%, and the net profit attributable to the shareholders of the parent company was 32.924 billion yuan, a year-on-year decrease of 42.9%; PetroChina’s operating revenue was 1.93 trillion yuan, a year-on-year decrease of 58.39%, and the net profit attributable to the shareholders of the parent company was 19.01 billion yuan, a year-on-year decrease of 23.16%.

For 2020 performance, “two barrels of oil” mentioned the impact of the epidemic in the financial report. China novel coronavirus pneumonia Zhang Yuzhuo said: “2020 is a very extraordinary year. The global epidemic of the new crown pneumonia epidemic, the world economy is seriously declining, the international oil price has experienced a sharp decline, the market demand has shrunk dramatically, the various risks are intertwined and superimposed, and the uncertainty of instability has increased significantly.”

In the upstream exploration and opening business sector, Sinopec’s oil and gas equivalent production in 2020 is 459 million barrels, of which the domestic crude oil production is 249 million barrels and the natural gas production is 1.07 trillion cubic feet, with a year-on-year growth of 2.3%; the domestic crude oil production of PetroChina is 743 million barrels, with a year-on-year growth of 0.6%; the marketable natural gas production is 3.99 trillion cubic feet, with a year-on-year growth of 9.9%, and the oil and gas equivalent production is 14.0% 900 million barrels, a year-on-year increase of 4.8%.

In the midstream refining and chemical business sector, in 2020, Sinopec will process 237 million tons of crude oil, produce 142 million tons of refined oil and 40.22 million tons of chemical light oil, with a year-on-year increase of 1.1%; PetroChina will process 1.177 billion barrels of crude oil, with a year-on-year decrease of 4.1%; it will produce 107 million tons of refined oil, with a year-on-year decrease of 9.1%; it will produce 6.345 million tons of ethylene, with a year-on-year increase of 8.2%; and the commodity volume of chemical products will reach 28.853 million tons, with a year-on-year increase 12%。

In the downstream sales business sector, Sinopec’s total sales volume of refined oil in 2020 was 218 million tons, including 168 million tons of domestic refined oil; PetroChina’s total sales volume of gasoline, kerosene and diesel was 161 million tons, a year-on-year decrease of 14.1%.

It is worth noting that although the annual performance of “two barrels of oil” in 2020 dropped significantly year on year, compared with the first half of 2020, it still turned loss into profit. In the first half of 2020, Sinopec’s net loss attributable to the shareholders of the parent company is 22.882 billion yuan, and PetroChina’s net loss attributable to the shareholders of the parent company is 29.983 billion yuan.

Behind the turnaround of annual performance is the continuous reduction of operating costs by “two barrels of oil”. In 2020, Sinopec’s purchase of crude oil, products and operating supplies and expenses amounted to 1.59 trillion yuan, a year-on-year decrease of 32.8%; exploration expenses amounted to 9.716 billion yuan, a year-on-year decrease of 7.6%; CNPC’s purchase, service and other expenses amounted to 1.26 trillion yuan, a year-on-year decrease of 25.3%; and sales, general and management expenses amounted to 64.345 billion yuan, a year-on-year decrease of 6.2%.

In addition to strengthening cost control, “two barrels of oil” is also speeding up the search for new growth points. In 2020, non oil business has become one of the highlights of “two barrels of oil” performance. Among them, Sinopec’s non oil business achieved a profit of 3.74 billion yuan, an increase of 15.6% over the same period last year, and the sales revenue of non oil products of PetroChina’s gas stations also reached 22.36 billion yuan.

Sinopec’s non oil business mainly refers to easyJet and its related businesses, the relevant person in charge of Sinopec told Beijing business daily. In 2020, Beijing Petroleum, a subsidiary of Sinopec, launched the business of “buying vegetables at ease”, which makes use of the convenience of many gas station outlets and fast supply channels to provide fresh vegetables to Beijing consumers.

For “two barrels of oil”, the performance in 2021 will still be affected by the fluctuating international oil price. Gao Xinwei, Professor of School of economics and management, China University of petroleum, said that at present, there is about 10% room for the rise of international oil prices in 2021, and at least 20% room for the fall. The probability of the rise is only 20%, while the probability of the fall is 80%. Especially after countries stop the quantitative easing policy and negative interest rate policy in the second half of the year, the possibility of the fall will be greater.

Beijing Business News (reporter Qian Yu, Pu Zhenyu)

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