Sinopec's 2025 Net Profit Drops 36.8% Amid Energy Transition and Weak Margins

China Petroleum & Chemical Corp (Sinopec) reported a 36.8 percent decline in 2025 net profit, reaching 31.8 billion yuan ($4.62 billion). The drop is attributed to increased new energy substitution and weak petrochemical margins. While gasoline and diesel production and sales fell, kerosene and natural gas output rose. The company plans significant capital spending in 2026, focusing on crude oil and natural gas capacity expansion, despite challenging market conditions and underperforming stock.

Sinopec, the world's largest oil refiner by capacity, announced a substantial 36.8 percent decrease in its 2025 net profit, posting 31.8 billion yuan ($4.62 billion) attributable to shareholders. This significant decline was primarily driven by growing substitution from new energy sources and unfavorable petrochemical margins. Operationally, gasoline production decreased by 2.4 percent to 62.61 million tonnes, and diesel production fell by 9.1 percent to 52.64 million tonnes. Conversely, kerosene production saw a 7.3 percent increase, reaching 33.71 million tonnes. Domestic crude oil output rose marginally by 0.7 percent to 255.75 million barrels, while natural gas production expanded by 4 percent to 1,456.6 billion cubic feet. Sales figures mirrored production trends, with gasoline and diesel sales declining, and kerosene sales increasing despite average price drops across all three. The company's annual refining gross margin improved slightly to 330 yuan per tonne, boosted by refining by-products. External sales revenue from chemical products decreased by 9.6 percent due to lower prices. Sinopec's capital spending in 2025 totaled 147.2 billion yuan, with a significant portion allocated to exploration and development. For 2026, the company projects stable domestic crude oil output but a decrease in overseas output, alongside a slight increase in natural gas production. Planned capital spending for 2026 ranges from 131.6 billion to 148.6 billion yuan, targeting crude oil and natural gas capacity expansion projects. Despite these efforts, Sinopec’s Hong Kong-listed shares have underperformed peers like PetroChina and CNOOC year-to-date.