Asia's top refiner China Petroleum & Chemical Corp. (Sinopec) boosted spending on exploration and production by 41% last year as crude oil reserves tumbled at its biggest oilfield.
Sinopec's upstream capital expenditure rose to 59.6 billion yuan (US$8.9 billion), its highest since 2014, as the company prepares to ramp up exploration at the Shengli oilfield and shale gas blocks in the southwestern Sichuan province.
The jump in spending was partially in response to Beijing's call for energy security, while untapped proven crude reserve from Shengli fell to 16 million barrels (MMbbl) by the end of 2018 from 49 MMbbl in 2017.
Sinopec also came under more pressure to source cheap crude as it plans record refinery runs in 2019.
Its total cost for purchasing crude oil rose 41% to 701 billion yuan because of higher global oil prices.
Sinopec plans to increase its crude processing rate to 4.92 million barrel per day (MMbbl/d), up from 4.88 MMbbl/d last year.
Its gasoline sales volumes last year were up 4.9% to 88 million tonnes, while diesel sales volumes dipped by 4.7%. Average diesel prices, however, rose 19% last year.
The refiner on Sunday posted its smallest quarterly net profit since at least the third quarter of 2016 after its oil trading business Unipec registered one of China's largest derivatives trading losses in nearly a decade.
Sinopec's fourth-quarter net profit plunged 76% from a year ago to only 3.1 billion yuan because of the one-off Unipec trading loss. Its revenue increased 33 percent to 818 billion yuan in the period, according to Reuters calculations.
Sinopec said Unipec had a net loss of 4.02 billion yuan last year. Unipec lost 4.65 billion yuan on crude oil hedging in the fourth quarter.
For 2018 as a whole the state-owned company still managed robust growth. Net earnings rose 23% to 63 billion yuan, the best annual results since 2013, and total revenue of 2.89 trillion yuan compared with 2.36 trillion yuan a year earlier.
The strong growth was mainly because of higher sales prices and volumes of refined products and chemicals, the company said in a filing to Shanghai Stock Exchange on March 24.
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