Sinopec, CNPC expect profit boost in first half on economic rebound

China's two biggest energy companies, China National Petroleum Corp and China Petroleum and Chemical Corp, expect a large increase in their profits for the first half on the back of an economic rebound from the COVID-19 pandemic and the rapid recovery of the petrochemical products market in the country.

CNPC, the country's largest oil and gas company, estimated its net profit to reach 45 billion yuan ($6.9 billion) to 60 billion yuan during the first half, after it posted a net loss of around 30 billion yuan during the same period last year, the company said on Thursday.

China Petroleum and Chemical Corp, which is known as Sinopec and is the world's largest refiner by volume, said it expects a net profit of 36.5 billion to 38.5 billion yuan during the first six months, up from a net loss of 22.9 billion yuan during the January-June period of last year. The growth rate is expected to reach 259 percent to 268 percent year-on-year, it said.

Final results from both companies are due to be released in late August.

An analyst said the expected sharp increase of net profits for both companies is the result of a robust economic recovery after China was hit by COVID-19, as well as strong petrochemical margins.

"In China, fuel demand has picked up, most notably in the road cargo and shipping sector. State-owned refineries have also ramped up production as the maintenance season came to an end," said Tang Sisi, an analyst at research firm BloombergNEF.

"The newly introduced tax on light-cycle oil and bitumen mix imports will phase out the blending of substandard diesel and provide support for refining margins."

CNPC said the company has seized the opportunity of rising crude oil prices and has continued optimizing production and management to improve quality and efficiency, which in turn put industry chain costs and expenses well under control.

Sinopec said the company has benefited from the rapid recovery of the petroleum and petrochemical products market this year to lower its purchase costs while expanding sales channels.

China's crude and natural gas production has logged growth starting this year.

The National Bureau of Statistics said domestic crude production reached 82.65 million metric tons during the first five months, up 2.2 percent year-on-year. The growth rate reached 4.1 percent, it said. Domestic natural gas production reached 87.2 billion cubic meters, up 10.3 percent year-on-year. The growth rate reached 21.4 percent, it said.