Sinopec's lower throughput target in H2 likely to cap China's crude imports

China's state-owned Sinopec aims to lower its crude throughput by 1.6% in the second half of 2024 to 5.03 million b/d (or 126 million metric tons) from the first half, according to the company's interim report released on Aug. 25, suggesting the country's crude imports may be capped for the remainder of the year.

Sinopec is the top refiner in the world in terms of its comprehensive processing capacity of 5.78 million b/d. The company's crude throughput accounted for 35.2% of China's total in H1, and it relied on about 86% of the feedstocks from imported crudes, according to the company report and data from the National Bureau of Statistics.

China's crude imports fell 2.9% year on year to 11.1 million b/d in H1, data from the General Administration of Customs showed.

As the world's second biggest oil consumer, the country's peak demand season for refined products usually occurs in September-October, while the maintenance season falls in March-June

Sinopec refined 5.12 million b/d, or 126.69 MMt, of crude in January-June, edging down 0.4% year on year.

That means both the target for H2 and the actual throughput in H1 were below the annual target of 5.22 million b/d for 2024 which was set in late March.

Oil products consumption down

Sinopec said in the report that domestic consumption of refined oil products fell 0.5% year on year in the first six months, and it cut utilization or shut the selected petrochemical production units with negative margins.

Its domestic refined product sales volume also reflected slow consumption, which fell 4.7% year on year to 56.96 MMt in H1. The reduction widened from the 0.2% posted for Q1.

Sinopec owns the widest retail sales network with 30,959 stations nationwide as of June 30, accounting for nearly one-third of China's service stations. Among these, 131 stations are with hydrogen-refiling service, the company said.

In H1 2023, the company reported a 16.7% year-on-year jump to 59.76 MMt in retail sales but was below 60.06 MMt in H1 2019 before the COVID-19 outbreak.

Sinopec said it adjusted the refined oil product slate following market changes.

In H1, the company's gasoline and jet fuel production rose 6% and 14.5% to 1.51 million b/d (32.34 MMt) and 679,313 b/d (15.65 MMt), respectively. Gasoil output, however, fell 9.3% year on year to 1.2 million b/d (29.31 MMt).

Its listed subsidiary Shanghai Petrochemical was likely the leader of the production adjustment.

Upstream output on target

In the upstream sector, Sinopec's oil and gas production were on track to meet the annual targets of 279.06 million barrels (762,459 b/d) and 1,379 Bcf, respectively, for 2024.

Sinopec produced 772,143 b/d of crude in H1, almost unchanged from the 771,710 b/d posted in the same period last year, while natural gas output rose 6% year on year to 700.57 Bcf.

As an effort for the country's energy security, Sinopec assigned 45% of its 2024 budget for exploration and production, at Yuan 77.8 billion ($10.93 billion), according to the company report. It was on target with spending of Yuan 33.79 billion in H1 and plans to spend Yuan 44 billion in the rest of the year.

Sinopec's operation results

* Oil outputs from both domestic and overseas

Source: Company report

Sinopec's domestic production (MMt)

^ Divide Sinopec's output by China's total production

Source: Company report, the National Bureau of Statistics

Sinopec's oil product sales (MMt)

Source: Company report