Sinopec unit issues profit warning

Workers inspect an oil well at a subsidiary of Sinopec Group in Puyang, Henan province. [Photo by Tong Jiang/For China Daily]

Sinopec Oilfield Service Corporation issued a profit warning, expecting a net loss of about 8.9 billion yuan ($1.33 billion) for the nine months that ended on Sept 30.

The drilling and services unit of China Petroleum and Chemical Corp, known as Sinopec, recorded a net loss of 2.1 billion yuan in the same period last year. This quarter's loss is the worst so far this year.

The company attributed the loss to the global crude oil prices staying at a low level.

Domestic and international oil and gas companies continued to cut expenditures on upstream exploration and development during the third quarter of 2016. These categories also contributed to the loss, the company said.

Shares of the Beijing-based company declined 0.25 percent to 3.95 on Thursday.

Li Yan, a crude oil analyst from Shandong Longzhong Information Technology Co, said the crude price plunge starting in 2015 has severely affected the oilfield services sector. Because the oilfield services industry's profits depend highly on the crude exploration sector, another tough year looms as things aren't getting any better, he added.

Sinopec had a net loss of 11.54 million yuan in the previous year.

Other listed companies of State-owned CNOOC also reported huge losses. China Oilfield Services Ltd is projected to have a large deficit of about 8.4 billion yuan in the first half, putting it at the top of the loss league table of the A-share market.

Oilfield services companies worldwide are suffering losses. The world's largest oilfield services provider, Schlumberger Ltd, has cut another 10,000 jobs early this year as crude rout deepens.

The drilling and services unit of China Petrochemical Corporation recorded a net loss of 2.1 billion yuan in the same period last year. Sinopec had a net loss of 11.54 million yuan in 2015.