Chinese Big Oil Profit Hit - Sinopec 86% Earnings Fall

China Petroleum and Chemical Corp., which is the largest oil refiner in the Asian region, has said that first quarter profit plunged by eighty six percent on the lower oil and chemicals prices, prompting the company's Hong Kong shares to decline as much as six percent. Profit attributable to shareholders slumped to 542 million yuan ($65 million) in the three months ended March 31st, from 3.94 billion yuan a year earlier, the company said. Sinopec's shares traded in Hong Kong fell as much as 8 HK cents to HK$1.24, the shares have now fallen by twelve percent in only four days. “The results are below expectations,” said Eva Chu, an analyst with BNP Paribas Peregrine in Hong Kong, Still, “oil prices started to pick up in March and refining margins are improving, so the company should start to look stronger in the second quarter.” While the oil prices have risen this year, the average for the first quarter was a fifth lower compared with a year ago on the London markets, denting earnings of oil companies around the world. Exxon Mobil Corp., which is the world's largest oil group by market, on Tuesday reported a fifty eight percent decline in first quarter earnings for 2002. Sinopec's first-quarter sales fell by seventeen percent to 63 billion yuan. Crude oil production was barely changed from a year ago at 9.3 million metric tons, while the level of crude processing declined 1.2 percent to twenty four million tons, the company said in a statement. Natural gas production rose 9.2 percent to 1.2 billion cubic meters. Gasoline processing fell by 7.2 percent to 4.2 million tons, kerosene processing fell 3.7 percent to a million tons, while diesel processing rose 4.8 percent to 8.8 million tons. On London's International Petroleum Exchange, Brent Blend crude oil last November declined to $17.33 a barrel, its lowest level in more than two years, on concern that an agreement to cut output between the Organization of Petroleum Exporting Countries and rival producers such as Russia may fall apart. This year, crude oil has risen by thirty one percent in London on signs that the US economy is recovering and concern that the rising Middle East tension may curtail shipments from that region. On Friday, Brent Blend rose 26 cents, or 1 percent, to $26.19 a barrel. Chinese oil companies saw first quarter profit slide by fifty nine percent in the first three months on lower oil prices, the State Economic Trade Commission said last week. Sinopec earlier said it would raise sales of fuels such as gasoline and diesel 3.8 percent to 70.5 million metric tons this year to raise profit. Under China's accounting standards, Sinopec said its profit fell by ninety seven percent to 102 million yuan in the first quarter, from 3.3 billion yuan a year earlier.

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