Sinopec Plans 3% Increase in Crude Throughput for 2023 Amid China's Recovery in Demand

Beijing [China]: Sinopec is aiming to grow its crude throughput by 3% in 2023, as the world's top refinery expects domestic demand for refined products and petrochemical products to rapidly increase. This comes as part of China's strategy to foster economic growth.

The company, which released its 2022 financial results on March 26th, said that it will take advantage of the steadily developing economy and the recovery of petroleum and petrochemical product demand in order to drive growth in a stable manner. It will also prioritize quality improvement and a reasonable volume expansion across its different businesses.

Sinopec, China's leading consumer of imported crude, has set a target for their processing capacity in 2023. The company is aiming to process 250 million metric tonnes, or 5.03 million barrels per day (b/d) - an increase of 3.2% from the 4.88 million b/d they realized in 2022 and lower than the 5.14 million b/d processed in 2021.

In support of this goal, oil-product output is expected to rise by 4.3% year on year to 146 million metric tonnes - in line with 2021's total production - while procurement from domestic producers is anticipated to bolster domestic oil-product sales, up 7.7% year on year to 175 million metric tonnes - the highest since 2019's 184.45 million mt figure.

Sinopec, one of China's state-owned energy companies, is increasing its production yields of gasoline and jet fuel in response to strong demand for transportation fuels as the country reopens. The company aims to produce 495.53 million barrels of oil equivalent (BOE) by 2023, a 1.3% increase from 2022 levels, consisting of 251.2 million barrels of domestic crude output and 29.03 million barrels overseas.

To make up for a slight decline in crude oil production, natural gas output is targeted to rise 3.4% year-on-year to 1.29 trillion cubic feet (Tcf). In terms of product yields, gasoil was the only clean product that saw year-on-year rises in production and sales in 2022, at 5.4% and 8.6%, respectively, providing further indication that Sinopec is on track with their goal of securing energy security for China's citizens.

Sinopec aims to cut its capital expenditure for exploration and production by 10.7%, from Yuan 83.3 billion in 2022 to Yuan 74.4 billion ($10.83 billion) in 2023. Notably, the budget remains higher than what was spent prior to 2022; five years ago, in 2018, Sinopec only spent Yuan 42.2 billion.

The total capax for the company will also be cut by 12.3% year-on-year to a total of Yuan 165.8 billion due to budget reductions in almost every segment.

Sinopec, one of China's largest oil and gas companies, has announced a budget cut in its chemical segment, reducing it by 13.1% to Yuan 16.6 billion in 2022. This comes amid slow demand and surging capacity, resulting in earnings before interest and taxes in the chemical segment falling 84.4% year on year to Yuan 3.5 billion.

The company's long-term goal is to increase the production of high-end chemicals while only increasing its budget in the corporate and others segment by 5.8%, rising to Yuan 5.5 billion for research, development, and information technology purposes.